WTI crude oil recently broke below support around the $56 per barrel mark then found support at $50.60 per barrel. Price is in the middle of a pullback and is currently testing the 50% Fibonacci retracement level.
This lines up with the 100 SMA dynamic resistance, which is below the 200 SMA dynamic inflection point. This means that the selloff is more likely to gain traction from here or that resistance levels are more likely to hold than to break. A larger pullback could last until the 61.8% level which lines up with the area of interest.
RSI has room to climb before reaching the overbought zone to indicate that there is some bullish pressure left. Reaching the overbought region and turning lower could mean that sellers might be ready to return from here. Stochastic is also turning lower to indicate that bearish pressure might be picking up.
Crude oil was off to a good start but is turning lower to start the week as trade tensions lingered. Recall that US President Trump recently announced a new batch of tariffs on China, so pessimism for a trade deal has gone up while expectations of retaliatory measures are lingering.
Keep in mind that earlier trade measures already had a drastic impact on the global economy, prompting central banks to ease policy at some point, so another set of tariffs would likely extend this slowdown. At the same time, a surprise build in crude oil stockpiles also weighed on prices recently.
Up ahead, trade developments would likely drive commodity prices, along with crude oil inventory data. Another large build in stockpiles could be indicative of weakening demand and a supply glut, both of which would drag prices further south. On the other hand, a large reduction could suggest that demand remains healthy.