WTI crude oil could be in for a major reversal off its downtrend as price busted through the top of the descending channel on the 1-hour time frame. Price has yet to pull back to nearby support areas to gather more buying pressure.

The 100 SMA appears to be attempting a bullish crossover from the 200 SMA to confirm that bullish momentum is picking up. Crude oil is trading above both moving averages as an early indicator of bullish pressure, so these could hold as dynamic support levels on corrections.

However, stochastic is already in the overbought zone to show that buyers could use a break. This could spur a retest of the broken channel top around $53 per barrel or lower. RSI is also in the overbought zone and looks ready to turn lower, so price could follow suit as sellers return.

Crude oil appears to have drawn a boost from projected weather disturbances in the northeast part of the US, as this could mean a disruption in supply and therefore lower output.

Of course the upcoming inventory figures from the American Petroleum Institute and Energy Information Administration might provide a clearer view of supply and demand conditions. Traders saw a large reduction in stockpiles for the other week, and another draw could confirm that purchases remain supported.

Risk appetite in general could also impact commodity price action, particularly with a couple of central bank decisions (BOE and RBA) and the NFP release coming up. Expectations of more stimulus could drive the commodity higher as traders expect more support for businesses and consumers. Then again, pessimism on the part of policymakers and downbeat data could indicate that the global economy might take longer to recover from the pandemic.