WTI crude oil continues to trade inside a descending channel on its 1-hour time frame even as it bounced off support. Applying the Fib retracement tool on the latest swing high and low shows that the 61.8% level is nearest to the channel top around $68.50 to $69 per barrel.

The 100 SMA is below the longer-term 200 SMA on this time frame, so the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. These moving averages are also near the 50% Fib or mid-channel area of interest around $68 per barrel, which might also be enough to keep gains in check. In that case, crude oil could drop back to the swing low or channel support closer to $66 per barrel.

RSI is on the move down so the commodity might follow suit while sellers have the upper hand. Stochastic is also heading down but is dipping into oversold territory to reflect exhaustion and a possibly return in bullish pressure.

Crude oil has enjoyed a bit of a relief rally, but all this might just be profit-taking from last week’s slide. A number of factors are pushing and pulling crude oil, particularly the sanctions on Iran that weigh on its output and market sentiment that is dampening the outlook for commodities.

For now, though, markets seem to be less focused on trade tensions while waiting for more developments. Last week’s Baker Hughes oil rig count report indicated a large increase in rigs, likely leading to higher supply in the weeks ahead. Drillers added 10 oil rigs in the week ending August 10, bringing the total count to 869, which is its highest level since March 2015.

From here, traders could turn their attention to the inventory data from the American Petroleum Institute and the Energy Information Administration to gauge US output.