WTI crude oil is already testing the resistance around the top of the falling channel on its 1-hour time frame. Price seems to have bounced off the ceiling and is making its way back down to the bottom around $45 per barrel or lower.

The 50% Fib lines up with the channel resistance and 100 SMA dynamic inflection point. A larger pullback to the 61.8% Fib or 200 SMA is still possible and a break past this area could mark the start of an uptrend.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is still to the downside. The gap is still sufficiently wide so there might not be a new crossover anytime soon, indicating that the downtrend could resume.

Stochastic is also turning lower so WTI crude oil could follow suit. Similarly, RSI is pointing down to indicate that sellers are taking over price action from here and might even be strong enough to take the commodity down to the $44 per barrel level.

WTI crude oil is still experiencing some selling pressure owing to the Middle East rift and its repercussions on the OPEC output deal. Also, US inventories rose last week to cap off nearly a month of declines, reviving oversupply concerns. Note that the EIA has recently downgraded global demand forecasts as well.

Meanwhile, JP Morgan slashed its 2018 oil price forecast by $11. “Neither the length of the extension, nor the compliance rate of its participants, concerns me as much as OPEC’s lack of an exit strategy. If OPEC really has the courage behind their convictions, then the optimal decision would have been to extend cuts through the end of 2018,” Ebele Kemery, head of energy investing at JP Morgan.

Prior to this, Goldman Sachs also cut its WTI crude oil forecast to US$52.92 from US$54.80 a barrel, citing that the OPEC has no exit plan after the output deal expires. This week, the focus could stay on US rig counts and inventory data.