Natural gas is trending lower on its short-term chart, and it looks like the selloff might pick up from here. Price bounced off the descending channel resistance and is testing support at the Fib extension levels.

In particular, the 38.% extension seems to be holding as a floor. Stronger selling pressure could take it further south to the 50% level at $4.730 or the 61.8% Fib at $4.690. The 76.4% level is at $4.640 and the full extension is at $4.559 near the channel support.

The 100 SMA crossed below the 200 SMA to confirm that the selloff is more likely to gain traction than to reverse. However, stochastic is indicating oversold conditions and is starting to turn higher to reflect a return in bullish pressure. RSI is in middle ground to signal consolidation.

A break above the channel resistance could mark the start of a reversal, but there are still a few upside barriers to break before buyers gain traction.

Natural gas is returning some of its recent gains, as the draw in stockpiles has not been as pronounced as expected. Recall that weather disturbances led to shut-ins among production facilities and left a number offline awaiting repairs for weeks.

But even with majority of output crippled, demand also took hits as temperatures have been dropping and weighing on purchases of cooling commodities.

The Department of Energy could report a build of 76 Bcf for the previous week, following the earlier rise of 83 Bcf. A larger build could mean more downside for natural gas prices while a smaller one or a surprise draw could spur a reversal from the downtrend.

Riskier holdings are also on the back foot these days after the FOMC confirmed that they would start tapering before the end of the year. They also hinted at a timeline for hiking interest rates next year, as inflation continues to heat up.