WTI crude oil has formed higher lows and higher highs to trade inside an ascending channel on its 4-hour time frame. Price is currently testing resistance and could be due for a pullback to support from here.
The 100 SMA is above the 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 gap between the two is widening as well, reflecting that bullish momentum is picking up.
RSI is starting to turn lower to show that selling pressure might return from here. On the other hand, stochastic is starting to turn higher without even reaching the oversold region, indicating that buyers are ready to return. In that case, the mid-channel area of interest could be enough to hold as support and possibly even push crude oil past the channel top.
The commodity has gained a lot of ground from the conflict between the US and Iran as airstrikes could cripple crude oil production in the area. Apart from that, the threat of sanctions on Iran could also limit global supply, thereby adding more upside pressure to prices.
Improving relations between the US and China are also contributing to the commodity’s upside as Phase One of the deal is expected to be signed by the middle of this month. If that pushes through, higher-yielding assets like crude oil could see more upside as business outlook improves.
Near-term volatility could be driven by inventory data as usual, with a large drawdown possibly resulting to more price gains and a large build likely weighing crude oil down. Apart from that, the NFP report might also have a strong impact on overall market sentiment and influence commodity price action.