WTI crude oil looks poised for a steeper climb as it attempts to break past the near-term resistance of the rising channel. Price is starting to close above the top of the channel at the $55.25 per barrel mark with a bullish flag.

Applying the Fib tool on the latest pullback shows the next potential upside targets. Price is already testing the 50% level at the $55.43 per barrel level but could be headed for the 61.8% level closer to the $56 per barrel major psychological mark. Stronger bullish momentum could take it up to the 78.6% extension at $56.58 per barrel of the full extension at $57.45 per barrel.

The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. Crude oil is also trading above both moving averages as a show of bullish momentum.

However, stochastic is already turning lower after hitting the overbought region, indicating that selling pressure is about to pick up. Similarly RSI is also on the move down to show that sellers have the upper hand. In that case, a correction to nearby support levels at the 100 SMA, mid-channel area of interest and 200 SMA dynamic inflection point could be in the works.

Falling supply levels from the OPEC signal that the cartel’s output deal may be starting to take effect, thereby easing global glut concerns. At the same time, expectations of improving trade sentiment and a longer period of low US borrowing costs are propping the commodity price higher.

To add to that, sanctions on Venezuela could also hit the country’s exports hard, which would further dampen global supply and keep prices elevated. The market now looks at inventory data and persistent geopolitical risks such as Brexit to gauge if the rallies could carry on.