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The continuous futures contract of crude oil on the Multi Commodity Exchange (MCX), which established its latest uptrend in November 2020, rallied sharply from ₹2,570 to reach ₹4,920 levels in March this year. The contract then faced a correction, started to appreciate again after taking support at ₹4,220 in the final week of March.
However, in May, when the contract reached ₹4,920 it struggled to move past it, once again, and largely moved sideways. The price did not fall like in March, though.
The contract seemed to attain enough momentum because of which it breached ₹4,920 last week. Besides, it rallied past the psychological level of ₹5,000 a week ago. This affirms the renewed bullish momentum increasing the likelihood of further rise in price.
Supporting this, the relative strength index (RSI) and the moving average convergence divergence (MACD) indicators on the daily chart are showing fresh uptick and both remain in their respective bullish territory. The average directional index (ADX) shows considerable bull strength. Also, the near-term uptrend can stay intact until the futures stay above ₹4,900.
On the back of the above factors, one can be positive and consider initiating fresh buys. That is, buy June expiry crude futures on the MCX with stop-loss at ₹4,900. The contract is expected to reach ₹5,300 in the near-term and if this level is breached, it can even touch ₹5,500. Once the price crosses ₹5,300-mark, shift the stop-loss upwards to ₹5,050.
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