Last Friday, crude bounced from its low at 40.50 (.20c below 162% extension level where we bought) and tested 41.40, but not as clearly as to be considered as a bottoming sign, and this leads us to expect another downside up to $38 in the coming hours or days.
There are two ways we can count the bounce: 1) LD 1 or 2) W-X-Y
Crude 15-min - August 1, 2016
In this 15-min chart, we have counted the bounce as a Leading Diagonal structure where each wave has 3 inner waves. Under this scenario, crude holds previous low and targets above $42-$42.40.
The second possibility is if the entire move is a double 3 correction and crude makes a new low towards 50% fibonacci.
Green wave 1-2-3 can construct corrective W; wave 4 = X; and wave 5 = Y
Crude 4H Chart - August 1, 2016
In this 4H chart, crude needs a new low to complete 5 waves for yellow wave c and put an end to this possible B wave or 2 if LD 1.
Downside targets to watch for are 50% & 62% retracement of entire rally.