Natural gas is still trending higher inside its rising channel on the 1-hour time frame, and price found support at the mid-channel area of interest.

Another test of resistance is in the works, with a break higher likely ushering in a steeper uptrend for the commodity price. Technical indicators, however, are giving mixed signals.

The 100 SMA is above the 200 SMA to indicate that resistance is more likely to break than to hold. Stochastic is indicating overbought conditions, though, which means that sellers might take over while buyers take a break.

RSI is already starting to head south after reaching the overbought area, so price could follow suit as selling pressure picks up. This could lead to another pullback to the middle of the channel around $4.900 or all the way down to support around $4.800.

The channel bottom is close to the 100 SMA dynamic inflection point, which adds to its strength as a floor. A larger correction could reach the 200 SMA dynamic support, which might be the line in the sand for an uptrend pullback.

Natural gas is staying supported, as the latest weather disturbances led to roughly 80% of production being shut in. This would keep a lid on output in the coming days, which would likely lead to draws in inventories.

The latest report, however, indicated a larger build of 52 Bcf versus the projected increase of 38 Bcf and the earlier gain of 20 Bcf. This suggests that demand may have taken a hit, as temperatures are starting to get milder. This weighs on purchases of cooling commodities like natural gas, although demand is likely to recover when the winter months roll in.

Risk appetite also seems to be keeping natural gas prices afloat, along with other higher-yielding assets, as traders are not expecting the Fed to withdraw stimulus anytime soon.