Crude oil (NYMEX:CLF14) reversed sharply to the upside last week so it seems that five waves down completed the wave 3) and the current rally is a part of a contra trend reaction. We are talking about wave 4) that could stop around the $100 area, but after three legs. For now, we see only one leg from the lows so expect to see more sideways or even bullish price action during the next few days.
On the four-hour chart, we can see the sharp bounce from 91.70 and falling through the resistance line put temporary bullish price action in play. We are talking about wave 4), which should be made by minimum three legs because this is the minimum structure of a corrective price action.
At the moment we see only one leg up. This is most likely wave A, but we still expect to see waves B and C. Ideally price will turn south in the next few sessions with wave B back to $94.50-$95.65 supports before going up into wave C toward $100 as shown on the chart below.
On the intraday chart we see why prices could retrace back below $96.00 in the near future. Well, we can count five waves up in black wave A, which means the trend could find resistance soon. Keep in mind that after every five waves, correction follows, which will be a black wave B. This black wave B could then represent a long opportunity to catch wave C up.