Crude oil prices were up last week. Brent crude oil futures on the Intercontinental Exchange (ICE) appreciated 0.9 per cent as it closed at $76.6 per barrel. Crude oil futures on the MCX gained 0.6 per cent and it ended the week at ₹6,010 a barrel.

Brent futures ($76.6)

Brent futures declined to mark an intraweek low of $72.3 last Wednesday before seeing a recovery to $76.6. Although the trend remains bearish, the price action on the chart shows some loss in downward momentum.

In case the contract recovers above the nearest resistance at $78, it can move up to $83. A breakout of this can turn the outlook positive. 

If Brent futures falls off the barrier at $78, it can dip towards the support band of $70-71. If this base is taken out, it can trigger another leg of downtrend towards $62.

MCX-Crude oil (₹6,010)

The January futures of crude oil declined to mark an intraweek low of ₹5,709 before recovering to ₹6,010. The recovery has not taken the contract above the barrier at ₹6,080. Therefore, the bias still remains bearish.

In case the resistance at ₹6,080 is breached, the crude oil futures will most likely extend the contract to ₹6,300, a hurdle. Subsequent resistance is at ₹6,500.

On the other hand, if crude oil futures falls from the current level, it will retest the support at ₹5,750. A break below this level can drag the contract to ₹5,500.

Trade strategy: Last week, we suggested traders to short December futures at ₹5,935. Roll-over the short to January expiry.

That is, exit the short on December contract and initiate fresh shorts on January series at the current level of ₹6,010. Add shorts in case the price rises to ₹6,200. Place stop-loss at ₹6,350.

When the contract falls below ₹5,750, tighten the stop-loss to ₹5,900. Liquidate the shorts at ₹5,550.