Natural gas is breaking above the resistance of its descending channel pattern on the 1-hour time frame, signaling that a reversal from the downtrend is underway.

However, the 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. Then again, natural gas has climbed above both dynamic inflection points, so these could hold as dynamic support moving forward.

Stochastic is already in the overbought zone to signal exhaustion, and turning lower would mean that sellers are ready to take over. RSI is also indicating overbought conditions or exhaustion among buyers.

If natural gas slides back inside the channel, price could dip back to the support levels at the bottom of the channel or the mid-channel area of interest at $5.000.

Natural gas remains supported even as forecasts predict a warmer winter season for the US. This could weigh on purchases of heating commodities at the end of the year and early next year, although supply shortages could still keep prices elevated.

The upcoming inventory report from the Department of Energy could determine whether or not the reversal has legs. Another draw or a smaller build might mean more upside for the commodity while a large increase in stockpiles could allow the selloff to resume.

Weather disturbances might continue to keep a lid on natural gas output, which could then drive up stockpiling activity leading up to winter.

Also, risk sentiment in the financial markets could be pushed around by central bank decisions and top-tier US reports due throughout the week. The US advanced Q3 GDP and core PCE price index are up for release later in the week, and these figures would likely impact Fed tightening expectations.