Natural gas is trending lower on the 1-hour time frame, forming lower highs and lower lows inside a falling channel. Price just bounced off the resistance and might be setting its sights on support.

Stochastic is moving down from the overbought zone to signal a return in selling pressure. RSI is also heading south, so natural gas price could follow suit and make its way to the mid-channel area of interest at $2.880 or the channel bottom at $2.850.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are still likely to hold. Price is also moving above both indicators, so these could hold as dynamic support near the middle of the channel. Then again, the gap between the indicators is narrowing to reflect slowing bullish momentum and a potential bearish crossover.

If that happens, selling pressure could accelerate and perhaps lead to a break below support, which might then set off a steeper slide.

Risk aversion from the surge in COVID-19 cases and fatalities in India, leading investors to worry that another global wave in restrictions might be announced. This could weigh heavily on risk-taking as businesses and consumers might pare activity, leading to lower demand for commodities.

Meanwhile, the upcoming inventory report from the Department of Energy would likely impact natural gas price action. A draw in stockpiles could mean some upside for the commodity as this could signal that demand remains supported even as temperatures rise.

Keep in mind that warmer weather would likely bring some seasonal purchases in natural gas, as this commodity is also used for cooling. Forecasts of higher temperatures could lead traders to predict stronger demand for natural gas down the line, which could allow a reversal from the slide.