WTI crude oil recently made an upside break from a short-term descending channel to signal a continuation of the longer-term climb. Price is inside a shallower ascending channel on the 4-hour chart and might aim for the top or the mid-channel area of interest from here.

The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. In other words, there’s still a chance for the selloff to resume and the commodity to revisit the channel bottom. Price has broken past the 100 SMA to signal bullish pressure and is attempting to climb past the 200 SMA dynamic inflection point.

RSI is on the move up but is closing in on overbought levels to signal rally exhaustion. Stochastic has already reached overbought territory and could be due to turn lower soon, also indicating a return in selling pressure.

However, fundamentals are strongly in favor of more crude oil price gains as the American Petroleum Institute and Energy Information Administration both reported larger draws in inventories. This eases oversupply concerns on the domestic front, especially since Baker Hughes reported no change in oil rig counts for the previous week.

If their upcoming report shows a reduction in rig counts or just a small gain, crude oil traders could maintain their bullish bets, especially since trade-related updates are sounding more positive lately. Although the US-China talks concluded without lifting any tariffs, the developments in NAFTA have been more positive and could be enough to shore up business confidence and risk appetite.

Dollar strength, however, could be a tough factor to contend with as the upcoming Jackson Hole speech of Fed head Powell could reiterate their hawkish stance and therefore lead to more gains for the US currency.