The short-term rally in the crude oil futures contract traded on the Multi Commodity Exchange (MCX) has halted in the past week. The contract tested a strong resistance near ₹3,170 per barrel and witnessed a surprise downward reversal on Wednesday. It is currently trading at around ₹3,065. There are series of supports poised near the current level are at ₹3,025, ₹3,000 and ₹2,985.

Whether the contract manages to reverse higher or fall below these supports will decide the next move. Traders can stay out of the market until a clear signal emerges.

A bounce back from the above supports can take the contract higher to ₹3,150-₹3,170 zone once again. If the contract manages to break above ₹3,170 decisively, then the rally can extend to the next targets of ₹3,250 and ₹3,300.

On the other hand, the contract will come under pressure if it declines below ₹2,985. In such a scenario, the danger will increase for a further fall to ₹2,800 or even lower levels.

MCX natural gas: The contract has been stuck inside a sideways range between ₹144 and ₹153 per mmBtu over the past week. It is currently trading near the upper end of this range at ₹150. A key resistance is at ₹154.6 – the 21-day moving average. A strong break above this hurdle is needed for the contract to gain momentum. Such a break can take the contract higher to ₹158 and ₹161 thereafter.

On the other hand, the outlook will turn bearish if the contract records a strong close below ₹144. The next targets will be ₹140 and ₹137. Traders can avoid trading this contract as of now.

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

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