Natural gas is still in correction mode on its downtrend, as price is pulling up to the 38.2% Fibonacci retracement level. This lines up with the mid-channel area of interest on its hourly time frame.

The area of interest also lines up with the 100 SMA dynamic inflection point, which is below the 200 SMA to confirm that the path of least resistance is to the downside. A larger pullback could reach the 50% level that lines up with the 200 SMA dynamic resistance at $5.357 or the 61.8% Fib closer to the channel top at $5.500.

Stochastic is heading up but already in the overbought region to signal exhaustion. Turning lower would mean that sellers are returning while buyers take a break, possibly taking natural gas down to the swing low at $4.783 or the channel bottom.

RSI is already moving south without reaching the overbought zone, indicating that sellers are eager to take over.

Natural gas remains supported due to supply constraints in other parts of the globe, but the near-term trend is bearish as demand for cooling commodities is dropping in the US.

Falling temperatures around this time of the year weigh on purchases of natural gas, although demand is likely to pick up after a couple of months when winter sets in. During this season, purchases of heating commodities rises until the start of the following year.

Analysts are maintaining estimates of an expensive winter in terms of heating commodities, and this could drive early stockpiling activity among businesses and consumers. Expectations of more weather disturbances weighing on production might drive price forecasts higher, so buyers might be keen on purchasing ahead of time.

The upcoming inventory report from the Department of Energy should shed more light on supply and demand conditions, as a larger build in stockpiles is eyed.