WTI crude oil appears to be consolidating inside a falling wedge as it forms lower highs and lower lows. Price is nearing the peak of the formation so a breakout could be due soon.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This suggests that a downside break is more likely to happen than a break higher. The wedge spans $66 per barrel to around $75 per barrel, so the resulting breakout could be of the same height.

The 100 SMA  also lines up with the top of the wedge to add to its strength as a ceiling around $68 per barrel. The 200 SMA is just close by at the major psychological $70 per barrel level that might also contain some sell orders.

RSI is pointing down without even reaching overbought levels to signal that sellers are putting up a stronger fight. Stochastic is also on the move down so the commodity price might follow suit.

Crude oil barely drew support from the pickup in risk-taking as markets remain wary of oversupply and potentially weaker demand next year. Recall that the OPEC downgraded its global demand forecast for 2019 in its latest monthly report and revealed that cuts in production from Saudi Arabia kept a lid on their output.

Looking ahead, traders could turn to inventory data from the US to gauge if there might be supply glut problems. Recall that the Baker Hughes report signaled an increase in rig counts, so this could also translate to higher output for the latest reporting week. If both the API and EIA indicate larger than expected gains, oversupply fears could resurface and spur a drop below the wedge bottom.

Apart from all that, prevailing sentiment could still favor a downside break as the worst of the crisis in Turkey and its currency doesn’t seem to be over.