WTI crude oil broke below its range support to signal that bearish momentum is picking up. Price even gapped lower to show that sellers are eager to return.

This could be followed by a drop that’s the same height as the rectangle pattern, which spans $70.35 to $73 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 selloff could carry on.

RSI is heading lower but already dipping into the oversold region to reflect exhaustion among sellers. Turning back up would suggest that buyers are returning. Stochastic is also dipping into the oversold area but has yet to move back up to indicate that bullish pressure is in play.

Crude oil is on weak footing after weekend data revealed that US oil rig counts increased, likely leading to stronger production or higher supply in the coming days. Rigs rose by 15 to 563 in the week ended Dec. 15 , data from energy analytics and software company Enverus Dec. 16 showed.

Profit-taking also likely contributed to the declines, as investors are starting to book profits before the year comes to a close.

Note that traders and businesses remain wary of the Omicron variant, which might weigh on business and consumer activity in the coming weeks. Purchases of fuel and energy commodities could take hits as a result.

Also, risk-off flows could continue to keep a lid on crude oil, as well as other higher-yielding assets like commodities. Central banks are already moving into a tightening phase in order to keep a lid on price pressures.

Note that the BOE already hiked rates in an effort to curb inflation and encourage spending, so other policymakers might follow suit. The Fed is projecting three interest rate hikes in 2022, which could further limit risk-on flows.