Crude oil futures contract traded on the Multi Commodity Exchange (MCX) gained for a second day, taking cues from the increase in global crude oil price. The global price advanced $2.12 to $38.46 a barrel on Wednesday.

Extending this rally it touched a high of $39.64 on Thursday as US output decline and stockpile growth slowed. The global price continues to test a significant resistance at $38. A decisive breakthrough of this hurdle can take the price northwards to ₹40 and then to $43 in the short term.

However, a fall below the immediate support level of $36 can pull it down to $34 or even to $31.75 in the same time frame.

Domestic trend On the domestic front, the MCX crude oil has been on a short-term uptrend since taking support at ₹1,805 a barrel in early February. While trending upwards, the contract has conclusively breached its 21- and 50-day moving averages and trades well above them. After a 3.7 per cent gain on Wednesday, the contract extended its gain in the last session as well by advancing 3.8 to a high of ₹2,644 and is hovering at ₹2,600. The contact tests a key resistance at ₹2,600.

An emphatic breach of this resistance can strengthen the short-term uptrend and push the contract upwards to ₹2,675 or ₹2,700 and then to ₹2,800, where the 200-day moving average resistance is poised. Traders with a short-term perspective can go long on a decisive breach of ₹2,600 with a stop-loss at ₹2,500. Conversely, a decisive fall below the immediate support at ₹2,400 can drag the contract down to ₹2,300 and then to ₹2,200. Only a tumble below ₹2,200 will mar the contract’s short-term term uptrend.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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