Since the beginning of July crude oil has been falling down sharply. The fall is breaking up into lower degree waves. The short-term as well as medium-term momentum indicators are in a bearish mode. In terms of wave structure the oil is forming an impulse on the downside and the fifth leg is forming an extension on the downside. The oil has broken the low of $42.03 on closing basis. Subsequent level on the downside will be $38-35. On the other hand, the swing high of $43.18 will act as a key resistance.