WTI crude oil continues to trend lower but is starting to consolidate inside a falling wedge pattern. Price is testing the resistance and seems to be attempting an upside break but technical indicators are signaling that the selloff is likely to persist.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. The gap is also getting wider to reflect strengthening bearish pressure. A break past the wedge resistance could still hit a ceiling at the 100 SMA dynamic inflection point around $47.50 per barrel.

Stochastic is still moving down to reflect the presence of bearish pressure while RSI appears to be moving sideways. An increase in selling momentum could lead to a drop back to support at $46 per barrel or a breakdown. The wedge pattern is around $4 in height so the resulting breakout could be of the same size.

NAFTA renegotiations are keeping crude oil traders nervous as some worry that the flow of the commodity from Alberta could be hampered. This signals that a surplus of oil from Canada and Mexico could be seen and that this could feed into the global glut.

Inventory data from the US has shown larger than expected draws in the past weeks, but this seems to be limited to the domestic industry. OPEC production remains elevated and traders are hoping to get stronger measures from the cartel in terms of curbing output, such as adjusting production caps or lifting exemptions on Nigeria and Libya.

Meanwhile, weak risk appetite is also weighing on crude oil and other commodities as traders are moving more funds in safe-havens. Geopolitical risks appear to be back in the spotlight after the fallout from Charlottesville and the terror attack in Barcelona hit the headlines. Traders are turning their attention to the Baker Hughes oil rig counts next and are likely to keep close tabs