WTI crude oil looks ready for a reversal from its slide as it forms a double bottom on its 1-hour time frame. Price is currently testing the neckline and a break above it could confirm that a rally would follow.

The 100 SMA is below the 200 SMA for now but the gap between the indicators has narrowed enough to reflect slowing bearish pressure and a potential bullish crossover. Price is already trading above both moving averages as confirmation that buyers have the upper hand. In that case, a break past the neckline resistance around $54 per barrel could set off a climb that’s around the same height as the chart formation, which spans $51 to 54 per barrel.

RSI is already in the overbought zone to indicate that buyers are tired and that sellers could take over from here. Stochastic is also turning lower after recently reaching the overbought zone, suggesting that bearish momentum might pick up. In that case, price could fall back to the lows at $51 per barrel next.

Crude oil is on slightly better footing as there have been no major flares in US-China trade talks so far. Recall that WTI crude oil is part of the list of items targeted by the Chinese government with retaliatory measures, so worsening tensions could mean weaker global demand for the commodity.

Price did get a boost from the FOMC minutes as well since the central bank indicated scope for further easing in order to stimulate the economy. This weighs on the dollar’s value while also lifting risk sentiment as businesses and consumers would likely take advantage of low interest rates to spend and invest.

In turn, this could spur stronger business activity, which then tends to support demand for energy commodities like crude oil.