The crude oil futures contract traded on the Multi Commodity Exchange (MCX) declined ₹38 or more than 1 per cent to ₹3,398 a barrel on Thursday. Once again, the contract has failed to decisively break the key resistance at ₹3,400 last week.
After marking an intra-week high at ₹3,425, the contract started to experience selling pressure and fell. However, significant support at around ₹3,130 arrested this decline on Monday and the contract bounced up thereafter.
Since late May, the contract has been on a sideways movement broadly in the band between ₹3,130 and ₹3,400. It currently test faces resistance at the upper boundary. An emphatic breakthrough of the upper boundary is needed to strength the contract’s uptrend and push it higher to ₹3,500 and ₹3,670 levels. However, inability to move past the ₹3,400 once again will retain the sideways movement.
Traders with a short-term view should tread with caution as long as the contract trades sideways. Can consider initiating fresh long positions above ₹3,400 levels with a fixed stop-loss at ₹3,300. But, if the contract drops below ₹3,130 it can decline ₹3,050.
To alter the short-term uptrend the contract needs to plunge below ₹3,050. Next supports are at ₹2,900, ₹2,800 and ₹2,600.
On the global front, WTI Crude Oil tests a key resistance at $50 a barrel and it fell 2.2 per cent to trade at $48.8 on Thursday. Conclusive breach of $50 can push it higher to $52 and $54 levels. Supports are at $48 and $46.
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