WTI crude oil is still moving higher above the rising trend line connecting the lows on its 4-hour chart. Price seems to have dipped below support, though, and a breakdown could set off a reversal from the climb.
The 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect strengthening bullish momentum, and price is above both moving averages so these could hold as dynamic support.
RSI is turning lower to show that selling pressure is picking up, and the oscillator has room to fall before reflecting oversold conditions or exhaustion among sellers. Stochastic is also just turning from the overbought zone to show that selling pressure is just picking up.
These suggest that a possible reversal might have enough traction, but crude oil would need to break below the 100 SMA dynamic support first.
Crude oil drew some support from the EIA report reflecting a reduction of 5 million barrels in stockpiles versus the projected increase of 1.7 million barrels. This signals that demand remains strong, especially some travel restrictions have already been lifted.
Expectations that business and consumer activity will continue to see a rebound in the coming months might keep the commodity price supported. Also, optimism that a vaccine could be developed soon might further ease fears of more lockdowns. On the other hand, fears of a second wave of the pandemic could keep gains in check and possibly even spur another downtrend.
Up next is the Baker Hughes oil rig counts report due over the weekend. Traders could continue to buy up crude oil if the report prints a decline as this would signal tighter supply conditions.