WTI crude oil is trending lower and moving inside a descending channel on its 1-hour time frame. Price just bounced off support and might be due for a test of resistance soon.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the channel top at $67 per barrel. The 200 SMA is currently holding as dynamic resistance near the 50% Fib and mid-channel area of interest. If this is enough to keep gains in check, crude oil could fall back to the swing low at the channel bottom around $64.44 per barrel.

The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. However, the gap between the two appears to be narrowing so a bullish crossover and return in buying pressure may be in order.

RSI is heading higher but is nearing overbought levels to signal exhaustion. Turning lower could bring sellers back in and allow the selloff to resume. Stochastic has already reached overbought territory but has yet to head south to confirm a return in selling pressure.

Crude oil is ticking higher as the American Petroleum Institute is reporting a much larger than expected inventory draw of 5.17 million barrels of United States crude oil for the week ending August 18. The API also reported a draw in gasoline inventories for week ending August 18 in the amount of 930,000 barrels.

This eases oversupply concerns in the US and could signal a similar result from the official data from the Energy Information Administration later in the week. This comes after Baker Hughes reported no change in the number of oil rigs in their latest period.

Still, crude oil could take cues from the meeting between representatives from the US and China as this could have implications for tariffs.