The continuous futures contract of crude oil on the Multi Commodity Exchange (MCX), which established its latest uptrend in November 2020, faced its first considerable challenge in March this year. The rally topped out at ₹4,985 and fell to make a low of ₹4,219 during the final week of March. That is, the contract lost a little over 15 per cent in a span of two weeks. However, the contract found support at the price band of ₹4,200 and ₹4,220 and started to consolidate.

Consolidation continued till mid-April and then the contract started to show some positive signs. It gradually started to head upwards and as a consequence, it moved above the resistance of ₹4,850 on Wednesday. Supporting the positive inclination, the price has moved above both 21- and 50-day moving averages and the daily relative strength index is showing a fresh uptick.

The moving average convergence divergence indicator, though stayed in the positive zone, was flat until two weeks back. It has now started to move upwards, indicating fresh bullish momentum. Also, the average directional index is showing that the bulls are gaining good traction.

Due to the above factors, the chances of a rally from here are good and so, traders can consider fresh longs. Buy MCX-Crude May futures with stop-loss at ₹4,680. While ₹5,000 can resist the bulls, it is highly likely to be breached and the contract can rise to ₹5,200 in the near-term.

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