WTI crude oil is trending lower inside a short-term descending channel and is currently testing resistance. Technical indicators are showing that the selloff is more likely to resume than to reverse from here.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. In that case, crude oil could resume its slide to the channel bottom around $57 per barrel next. The 100 SMA also lines up with the channel top at $58 per barrel to add to its strength as a ceiling.
RSI is heading higher to show that there’s still some bullish pressure in play, but the oscillator is closing in on the overbought region to reflect exhaustion. Stochastic is also on on the move up so price might follow suit, but it is also nearing the overbought territory to suggest that sellers could take over soon.
Earlier this week, the EIA reported a surprise 2.5 million barrel draw in crude oil stockpiles, which has helped stem losses for the commodity. Still, downside pressure remains on easing Middle East tensions as traders book profits off their speculations that sanctions could cripple oil output in the region.
The downtrend could gain traction as the conflict subsides, but weekend news could still spark rallies if tensions escalate or further airstrikes are reported. Other than that, updates on the US-China trade negotiations and the likelihood of other tariffs being lifted could also impact crude oil price action.
So far, the Phase One of the trade deal has been signed but officials have noted that the next phase could take longer. In that case, traders might pare expectations of WTI crude oil tariffs being lifted soon.