WTI crude oil recently broke above a falling trend line on its 4-hour time frame to signal that a reversal from the downtrend is underway. Price is retesting the former resistance area which might hold as support.

If it does, crude oil could recover to the upside targets marked by the Fibonacci extension tool. The 38.2% level lines up with the swing high and might be the first profit target at $74.02 per barrel.

Stronger bullish pressure could take it up to the 50% level at $75 per barrel or the 61.8% Fib at $76.12 per barrel. The 76.4% level is at $77.41 per barrel and the full extension is at $79.51 per barrel.

Stochastic is still heading down to show that there is some bearish momentum left, but the oscillator is dipping close to the oversold region to signal exhaustion. Turning back up would mean that buyers are returning and could take crude oil back to the upside targets.

Crude oil might be under downside pressure due to the OPEC+ decision to increase output by 400K barrels per day starting this month until December. Also, the Delta variant spread has been a cause for concern among economies and businesses, possibly leading to lockdown restrictions that could hamper demand for fuel and energy commodities.

The upcoming inventory reports from the EIA and API would likely impact crude oil price action during the middle of the week, as another smaller build could keep the commodity supported. On the other hand, a large increase in stockpiles would confirm that supply is elevated while demand is weakening.

Risk appetite would likely impact commodity movements as well, especially with the NFP report lined up. Recall that the Fed emphasized that they’d like to see stronger evidence of jobs growth before reducing stimulus, so a weak read might keep higher-yielding assets supported.