WTI crude oil is retreating from the top of its shallow descending channel on the 1-hour time frame, but it looks like the correction is over. Price is bouncing off the 38.2% Fib and might be due to test the channel top again.

A break above this and the swing high at $53.80 per barrel could set off a reversal from the slide. The 100 SMA is still above the 200 SMA after all, suggesting that bullish momentum is still present. Price is also trading above both moving averages, so these could hold as dynamic support.

Then again, the gap between the indicators has narrowed to reflect slowing bullish pressure and hint at a possible bearish crossover. If that happens, a larger correction to the 61.8% Fib at $52.52 per barrel could ensue or perhaps a dip back to the channel bottom.

Stochastic is turning higher after recently dipping to the oversold region, suggesting that buyers could return while sellers take it easy. RSI is also heading north, so price could follow suit while buyers have the upper hand.

Crude oil appears to be picking up on the optimism in financial markets following the inauguration of President Biden. He has already started on sweeping executive reforms in his first day in office, promising a better response to the pandemic and possibly restoring normal business conditions earlier than expected.

Meanwhile, the EIA inventory report is expected to show a draw of 1.2 million barrels in stockpiles, smaller than the earlier reduction of 3.2 million barrels. Keep in mind, though, that the API reported a surprise build in inventories to hint that demand has been weaker than expected.

Still, overall market sentiment might be the main driver of price action for the rest of the week as most businesses appear optimistic about the Biden administration.