WTI crude oil has formed higher lows and higher highs to trade inside a rising channel on its daily chart. Price is testing the resistance and looks prime for a break higher.

If that happens, a steeper uptrend could follow. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the resistance is more likely to break than to hold.

However, stochastic is heading lower to suggest a return in selling pressure. This might be enough to take crude oil back to nearby support areas, such as the mid-channel area of interest at $46 per barrel or the channel bottom near $40 per barrel.

The moving averages might also hold as dynamic support levels, with the 100 SMA at $44 per barrel and the 200 SMA at $38 per barrel.

RSI appears to be heading higher, so there might still be some bullish pressure left enough to spur a break past the $50 per barrel major psychological resistance.

Risk appetite has been strongly in play so far this year as traders focus on vaccine developments and stimulus programs from governments. These could allow business and consumer activity to stay afloat, even as the pandemic rages on.

Market sentiment might also take cues from the FOMC minutes and NFP release later this week, as stronger odds of more easing could be bullish for commodities. For now, though, it appears that the controversy with Trump’s call on Georgia is keeping risk-taking at bay.

Meanwhile, the inventory reports from the American Petroleum Institute and Energy Information Administration could also bring in additional volatility. A build in stockpiles would reflect weak crude oil demand, thereby weighing on its prices. A reduction, on the other hand, would suggest that demand remains supported and allow the commodity to carry on with its rallies.