Natural gas could be in for a reversal from its climb, as price is forming a head and shoulders pattern on its hourly time frame. Price has yet to test and break below the neckline around $5.000 to confirm this.

The 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. Price is also finding support at the 100 SMA dynamic inflection point at the moment, with the 200 SMA close to the neckline to add another floor.

Stochastic is heading down, though, so selling pressure is present. The oscillator has plenty of room to head down before reaching the oversold region, which means that price could keep following suit until it does.

RSI, on the other hand, has room to climb before indicating overbought conditions or exhaustion among buyers. This suggests that buyers could still keep the uptrend going.

Natural gas prices remain elevated due to the energy crunch, not just in the US, but also in other parts of the world like Europe and Asia. Weather disturbances like the flooding in China are disrupting production of other fuel and energy commodities, keeping output limited.

The latest report from the Department of Energy revealed a smaller build of 81 Bcf versus the estimated increase of 97 Bcf and the earlier gain of 118 Bcf. This suggests that demand picked up, possibly on stockpiling activity as businesses make purchases ahead of potentially higher prices.

Near-term demand in the US could still stay subdued due to lower temperatures weighing on demand for cooling commodities in the next couple of months. However, purchases would likely start picking up before the end of the year as winter rolls in.