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Crude oil futures contract traded on the Multi Commodity Exchange (MCX) has been closing on a negative note over the past five trading sessions.
Last week, the contract tumbled almost 4 per cent to ₹2,961 a barrel decisively breaching a vital support at ₹3,000 which was cushioning it. This fall has strengthened the short-term downtrend that started from the key resistance at ₹3,400 in early June. It currently trades well below its 21- and 50-day moving averages.
The contract was trading at around ₹ 2,823, marginally down by 0.3 per cent on Thursday. The daily relative strength index is featuring in the bearish zone backing the short-term downtrend.
Moreover, both the daily and weekly price rate of change indicators are hovering in the negative territory implying selling interest. The short-term outlook is bearish. The contract can extend its downtrend and test support in the band between ₹2,700 and ₹2,730.
Further slump below the band will strengthen the downtrend and pull the contract down to ₹2,600 in the short to medium term. Traders with a short-term perspective can make use of corrective rallies to initiate fresh short position with a stop-loss at ₹2,900.
On the other hand, a strong breach of the immediate resistance at ₹2,900 can take the contract higher to ₹3,000. The medium-term uptrend that commenced in late February will be intact as long as the contract trades above the significant support level of ₹2,600.
On the global front, the short-term downtrend in WTI Crude Oil is gaining strength. Now, it tests a key support at $42. Strong fall below this level can pull the crude oil price down to $40 and then to $38 in the short term. Key resistances to note are placed at $44.5 and $46.
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