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The MCX-crude oil futures contract witnessed a bullish breakout above ₹6,340/barrel in line with expectation. Threat of a supply disruption following the violence in Iraq triggered this rise. The contract has dipped slightly after failing to extend beyond the 38.2 per cent Fibonacci retracement resistance level. However, key support is available at ₹6,340 which can now be tested.
Given the ongoing violence in Iraq, a break below ₹6,340 looks less likely. A reversal from here can target ₹6,500 in the coming week. A break above ₹6,500 can take the contract to ₹6,700. Short-term traders can buy the contract at ₹6,350. Stop-loss can be at ₹6,280 for the target of ₹6,480.
The short-term outlook will turn bearish only on decisive close blow ₹6,340. The ensuing target on such a break will be ₹6,200.
MCX-Natural gas: The MCX-natural gas futures contract had risen sharply from its 21-day moving average support level last week. But the contract is now finding resistance at ₹289 per mmBtu and is reversing lower again. There is a high probability for decline to the 21-day moving average support at ₹274.
If the contract fails to break below ₹274 and reverses higher from this level, it can rise to ₹280 and ₹283 thereafter. In such a scenario, short-term traders can go long at ₹275 with a stop-loss at ₹272 for the target of ₹280.
On the other hand, if the contract declines below ₹274, it can then target ₹269 and ₹265.
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