Oil is building a bullish retracement within a larger downtrend. The pullback is most likely part of corrective wave 4 (pink) pattern, which therefore could see a bearish bounce at the Fibonacci retracement levels.
Oil is expected to make a bearish bounce at the 38.2% or 50% Fibonacci levels. A break above the 50% Fib makes the current wave 4 (pink) pattern less likely. A bearish breakout below the support trend lines (blue) could potentially confirm the downtrend continuation towards the Fib targets within waves 5 (pink/purple).
Oil’s bearish momentum has been very strong on the daily chart and a bearish continuation is likely as long as price stays below the 50% Fib resistance.