Natural gas continues to trend lower inside its short-term descending channel but it looks like buyers are strongly defending the longer-term floor. This is around the 3.000 major psychological mark and might form the bottom of a descending triangle.

A bounce off this area and a break past the short-term channel top could spur a move to the triangle resistance around 3.400. However, the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, support is more likely to break than to hold. In that case, a test of the channel bottom could be in the works.

Volumes has been subdued but could pick up if a breakout ensues. Stochastic is already indicating oversold conditions or that sellers are exhausted. Turning higher could indicate that buyers are starting to take over. A bit of bullish divergence can be seen as stochastic made higher lows while natural gas price had lower lows.

RSI also appears to be crawling higher even though it hasn’t hit the oversold region just yet. It could keep moving sideways to signal consolidation while buyers and sellers continue to battle it out.

Natural gas is still drawing support from sustained demand as the cold weather conditions in the US are projected to last longer than initially anticipated. However, production is also hitting record highs, which keeps the prospect of oversupply in place.

Also, once the weather starts to warm, this could leave a huge amount in inventories. Calls for reopening pipelines are also getting stronger, especially with Trump seen to bypass state laws and use his presidential powers to ramp up output in the name of a national emergency. Risk appetite influenced by geopolitical risks like trade tensions could also determine where natural gas price is headed next.