The Crude Oil prices have been falling since the beginning of this month. The Crude Oil futures contract on the New York Mercantile Exchange (NYMEX) surged to a high of $77 per barrel on October 3 and has reversed sharply lower from there. The contract has tumbled over 7 per cent from the high and is trading around $71 per barrel.

On the domestic front, the Crude Oil futures contract on the Multi Commodity Exchange (MCX) made a high of ₹5,669 per barrel and has come-off from there in tandem with the NYMEX prices. The MCX contract has fallen over 7 per cent and is currently trading at ₹5,235 per barrel.

The fall in the oil prices over the last couple of week has turned the short-term outlook negative. The NYMEX-Crude Oil contract has a key resistance in the $72.80-$73 region. As long as it trades below this resistance region, a fall $69 or $68 is likely in the short term.

The level of $68.3 – the 200-day moving average is a crucial support for the NYMEX contract. A strong break below it will increase the selling pressure. Such a break will then increase the likelihood of the fall extending to $65. On the other hand, if the contract manages to bounce from $68.3 and gains momentum, it can revisit $75 levels again.

On the domestic front, the MCX-Crude Oil (₹5,235 per barrel) has resistance in the ₹5,450-₹5,500 region. While the contract remains below this ₹5,450-₹5,500 resistance region, a fall to ₹4,800 is possible in the coming days.

Short-term traders with high risk appetite can go short at current level and also accumulate at ₹5,400. Stop-loss can be placed at ₹5,550 for the target of ₹4,800. Revise the stop-loss lower to ₹5,150 as soon as the contract moves down to ₹5,050.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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