WTI crude oil has been on a tear but there could be signs that the bullish momentum is fading. Price is already testing the 61.8% level that lines up with the top of the ascending channel on the 4-hour time frame, so profit-taking might be due.
Besides, the end of the week is approaching and dips are generally associated with this time. If resistance holds, crude oil could retreat to the bottom of the channel or at least until the mid-channel area of interest near the 100 SMA dynamic inflection point.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. The 200 SMA lines up with the bottom of the channel around $56 per barrel to add to its strength as a floor.
RSI is in the overbought zone to signal that bullish momentum might be weaker and that sellers could take over from here. Similarly stochastic has been in the overbought zone for quite some time, also suggesting exhaustion among buyers and a possible takeover by bears. Sustained upside momentum, on the other hand, could take price to the 78.6% level close to the $60 per barrel major psychological mark or the full extension at $61 per barrel.
Crude oil continues to draw support from global forces like the US sanctions on Venezuela and the OPEC output deal. Shale production is reportedly weaker, which also helps keep demand for WTI crude oil supported.
The cartel reaffirmed its commitment to production cuts, helping curb global supply and easing fears of a glut. Some think that their output deal might even be extended once more if deemed necessary or agreed upon by major players.