The Oil chart is in a strong uptrend but price has tested and bounced at a pivotal and key resistance zone: the bottom of wave 1. The reversal at the key resistance spot could still indicate that a bearish wave 4 pattern is still alive.
A break above the bottom of wave 1 would have indicated an invalidation of the current expected bearish wave 4 but the bearish bounce keeps that particular wave pattern alive. Price however will need to break below the support trend lines to confirm a bearish breakout and start of a wave 5 (purple) pattern. A break above the previous bottom (red) and the resistance trend line (dark red) would indicate that a different wave count is valid and a potential bullish breakout could start soon.
Oil is moving up higher in a neat uptrend channel, which is indicated by the support (green) and resistance (orange) trend lines. Price will need to break below the support levels to confirm the potential wave 5 whereas a bullish breakout could indicate a potential bullish wave 3 pattern.
If the long-term bearish wave pattern is correct, price could now be building a wave 1-2 reversal pattern (pink). Price should stay below the 100% Fibonacci level however, otherwise price would invalidate the wave 1-2 wave pattern. A break below the support trend line could confirm the start of a bearish wave 3 and the completion of wave 4 (purple) at the recent high.
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