WTI crude oil looks ready to resume the downtrend, as price is finding resistance at the top of its falling channel on the hourly time frame. If the ceiling holds, the commodity price could slip down to the next downside targets.
The Fibonacci extension tool shows the levels that sellers might be aiming for. The 38.2% level is at $87.43 per barrel or the swing low while the 50% level is at $86.30 per barrel, which is near the mid-channel area of interest.
Stronger selling pressure could take crude oil down to the 61.8% level at $85.16 per barrel or the 76.4% level near the channel bottom at $83.76 per barrel. The full extension is at $81.49 per barrel.
The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the downtrend is more likely to resume than to reverse. The 100 SMA even lines up with the channel top to add to its strength as a ceiling, and the gap between the indicators is widening to reflect strengthening bearish pressure.
Stochastic is already starting to turn lower after reaching the overbought area, indicating that sellers are taking over while buyers are taking a break. RSI is also moving south without even reaching the overbought region, hinting that sellers are eager to return.
WTI crude oil could take cues from the inventory data from the American Petroleum Institute and Energy Information Administration. Another large build in stockpiles would point to weakening demand, possibly as businesses reduce fuel and energy purchases due to weaker sentiment.
On the other hand, a draw in inventories might signal that demand remains elevated or that production is struggling to keep up. Bear in mind, though, that the OPEC+ recently agreed to increase their output targets by 100K barrels per day in order to keep global supply supported.