WTI crude oil broke above the neckline of its double bottom on the 4-hour time frame, confirming that a reversal from the downtrend is underway.

Price also broke above the 200 SMA dynamic resistance as an early indication of bullish pressure. The 100 SMA is below the 200 SMA for now, but the gap between the two is narrowing to reflecting weakening selling momentum and a potential crossover.

The commodity price could climb by the same height as the chart formation, which spans around $65 per barrel to $75 per barrel. However, RSI is already indicating overbought conditions or exhaustion among buyers, so turning lower would mean that sellers are returning.

Similarly stochastic is in the overbought region to suggest that buyers could use a break and let sellers take over from here. In that case, price might still dip to the broken neckline, which might hold as support moving forward.

The crude oil inventories reports from the EIA and API might impact crude oil price action throughout the week, as another draw in stockpiles would reassure investors that demand remains supported or that supply is limited. Note that some countries are still under somewhat of an energy crunch these days.

A build, on the other hand, could signal that purchases are taking hits due to concerns about the Omicron variant. Some countries are starting to tighten restrictions once more, possibly weighing on business activity and demand for fuel and energy.

Risk sentiment for the rest of the year could also determine where crude oil prices are headed next. Volatility could spike on any major headlines, but otherwise price action could go sideways. Profit-taking might also bring about big price moves closer to the end of the year, as traders exit their latest positions in order to close the books.