WTI crude oil broke through the neckline of its inverted head and shoulders pattern on the short-term time frames, indicating that a reversal from the downtrend is due. Technical indicators, however, suggest that bearish momentum is still present.

The 100 SMA is below the 200 SMA to show that the path of least resistance is to the downside or that there’s a chance the selloff could resume. However, crude oil has climbed above the 200 SMA dynamic inflection point as an early indicator of bullish pressure.

Stochastic is indicating overbought conditions, though, so turning lower would signal that sellers are returning while buyers take a break. RSI has a bit of room to climb, but the oscillator is also approaching the overbought zone to signal exhaustion among buyers.

Crude oil turned slightly lower in previous sessions, as investors were wary of ramped up COVID-19 testing in China. After all, confirmation of more cases and the possibility of stricter lockdowns could cripple business activity, weighing on demand for fuel and energy commodities again.

However, the commodity got a fresh boost when Germany signed off on a full oil embargo on Russia, which suggests that global supply would be limited. Keep in mind that the US has been encouraging its allies in Europe to end reliance on Russian commodities in order to discourage it from attacking Ukraine.

The Wall Street Journal reported that German representatives to the European Union are no longer objecting a full Russian oil embargo as long as Berlin is given time to secure alternative supplies.

This follows  comments from Germany’s Economy Minister Robert Habeck on Tuesday, when he said the EU’s largest economy, could cope with an EU embargo on Russian oil imports and it was hoping to find ways to replace Russian oil with other supply.