WTI crude oil might be in for a reversal from its uptrend, as the commodity price is forming a head and shoulders pattern on its hourly chart. Price has yet to break below the neckline around $110 per barrel to confirm the downtrend.

If that happens, crude oil could be in for a slide that’s the same height as the chart formation or around $6, possibly taking it down to around $105 per barrel or lower.

Stochastic is on the move down to confirm that sellers have the upper hand, and the oscillator has room to head lower before reflecting oversold conditions. RSI is also heading lower to show that bearish pressure is present.

However, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. Crude oil has dipped below the 100 SMA, though, so this could hold as dynamic resistance moving forward.

Crude oil is on weak footing once again, as traders appear wary of the lockdown in Shanghai and possible spillover effects to the rest of the global economy. The city is imposing restrictions to curb the spread of the virus and to conduct testing among its population, likely dampening business and consumer activity for a few days.

The upcoming inventory report would likely bring additional volatility for the commodity midweek, followed by the US jobs report later in the week. A slower pace of hiring is eyed, but a higher than expected read might confirm that the Fed is set to announce back-to-back interest rate hikes.

In that case, commodities like crude oil could take more hits, as the prospect of higher borrowing costs would further limit consumer spending and therefore commodity demand.

The OPEC-JMMC meets this week as well, but no major changes are eyed.