Natural gas is trading below a descending trend line on its 1-hour chart, and it looks like a pullback to this resistance level is underway. Applying the Fibonacci retracement tool shows where sellers are likely waiting.

The 61.8% level is closest to the falling trend line while the 50% level is closer to the dynamic resistance at the moving averages and a former support level. A shallow pullback could already find sellers at the 38.2% level or $2.832.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is likely to resume. However, the gap between the indicators has narrowed to reflect weaker selling pressure and a potential bullish crossover.

Stochastic is turning higher to indicate that bullish pressure is returning, so the correction might gain traction. The oscillator has plenty of room to climb before reflecting overbought conditions or exhaustion among buyers. RSI is also heading higher, so price could follow suit while buyers have some energy. Bearish momentum could return once the oscillators reach the overbought area.

Natural gas saw a reduction in stockpiles of 98 Bcf in the latest Department of Energy report, and this was smaller than the draw expected by market analysts. This suggests that demand was likely feeble or that supply has picked up after a number of production facilities reopened after temporary shutdowns on account of the winter storms.

Warmer temperatures have been reported in some parts of the US, weighing on demand for heating commodities. However, risk-taking might still favor higher-yielding assets like commodities in the coming days as traders focus on vaccination efforts and the prospect of US government stimulus.

Of course the inventory report might still dictate direction for natural gas, as another draw in stockpiles could keep prices afloat.