WTI crude oil continues to trend higher as it tests the top of the ascending channel on the 1-hour chart. Price could be due for a pullback from here in order to gather more bullish momentum.
Applying the Fibonacci retracement tool shows that the 38.2% level lines up with the shorter-term rising trend line around the $51 per barrel mark. A larger pullback could last until the 61.8% Fib just below the mid-channel area of interest and near the $50 per barrel major psychological mark. The bottom of the rising channel at the $48.36 per barrel level could be the line in the sand for this uptrend.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. In other words, the uptrend is more likely to resume than to reverse. The gap between the moving averages is widening to reflect stronger bullish momentum. The 100 SMA lines up with the short-term rising trend line to add to its strength as support.
However, RSI is still heading south after recently hitting the overbought zone. The oscillator has plenty of room to head south before indicating oversold levels and a return in bullish pressure. Stochastic is also just heading lower so crude oil might follow suit while bears are in control. This oscillator has more room to head lower, which suggests that selling pressure could stay in play for much longer.
Crude oil is drawing support from improved risk appetite, possibly stemming from a less hawkish Fed statement and positive expectations from US-China trade talks. Inventory data from the API and EIA could still spur some volatility this week, but traders also seem to be pricing in the impact of the OPEC output cuts that have already taken effect.