Natural gas fell through its rising trend line support, indicating that a reversal from the uptrend is in order. Price is still completing its retest of the former support that appears to be holding as resistance.

This lines up with the 38.2% Fibonacci retracement level around the $7.357 mark and the 100 SMA dynamic inflection point. A higher pullback could reach the 50% level at $7.651 or the 61.8% Fib near the $8.000 major psychological mark.

However, the 100 SMA is still above the 200 SMA to show that the path of least resistance is to the upside. In other words, there’s a chance that the uptrend could carry on.

Price also found support at the 200 SMA dynamic inflection point and would need to break below this and the swing low at $6.405 to confirm the reversal.

Stochastic is pulling higher from the oversold region to reflect a return in bullish pressure, which might be enough to take natural gas back up to the swing high. The oscillator has plenty of room to climb, so price could follow suit while bullish pressure remains in play.

RSI is also on the move up, so natural gas could keep climbing until overbought conditions are met.

Natural gas sold off, as traders seemed to be brushing off the sharp drop in output, likely since most of the decline was tied to maintenance activity. The upcoming inventory report from the Department of Energy is slated to show a larger 82 Bcf reading compared to the earlier 77 Bcf figure, reflecting slower demand.

A larger than expected build might mean more losses for the commodity since it would confirm that purchases are winding down while temperatures rise. A smaller increase or a surprise draw could revive the uptrend for the commodity since it might reflect increased export activity.