WTI crude oil is still trending lower inside its descending channel on the 1-hour time frame after its recent climb. Price is testing the resistance, though, and an upside breakout could spur a reversal from the downtrend.

However, the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. Applying the Fibonacci tool on the latest swing high and low shows the potential downside targets.

Crude oil could first hit the 38.2% extension near the moving averages’ dynamic inflection points or the 50% extension at the mid-channel area of interest. Stronger selling pressure could take it down to the 61.8% extension at $67.78 per barrel or the 78.6% extension at $67.19 per barrel. The full extension is located at the channel bottom around $66.50 per barrel.

RSI is still on the move up to signal that there’s some buying pressure left. Similarly stochastic is heading up to signal that buyers have the upper hand. Then again, both indicators are closing in on overbought levels to reflect exhaustion among buyers and likely profit-taking.

Crude oil has been treading carefully on account of the US sanctions on Iran, as this could lead to an oversupply in global markets. However, fears were calmed after other members of the nuclear deal expressed their decision to keep importing crude oil from Iran.

Still, trade war jitters and geopolitical risks remain, likely keeping crude oil gains limited for the time being. The US is due to release inventory data from the American Petroleum Institute and the Energy Information Administration over the next couple of days, so the attention could be on US output.

Another large build in stockpiles could weigh the commodity down while a surprise draw could ease oversupply concerns and keep prices supported.