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Crude oil prices rose over the past week. Brent crude oil futures on the Intercontinental Exchange (ICE) was up 4.5 per cent by closing at $90.9 per barrel. Crude oil futures on the MCX was up 5.4 per cent by ending the week at ₹7,284 a barrel.
Brent Crude futures ($90.9)
Brent Crude futures has closed just above the resistance at $90. This is a positive signal and the probability of the price going up further is high.
Given the prevailing momentum, Brent crude futures can touch $96 soon. A breach of this can lift the contract to $100.
On the other hand, if the contract declines, it can find support at $85. Only a breach of this will turn the near-term trend bearish. Immediately below this level, there are support levels at $84 and $81.
MCX-Crude oil (₹7,284)
The April crude oil futures broke out of ₹7,000 comfortably and closed at ₹7,284. The chart hints at more rally in the forthcoming sessions.
Although ₹7,500 is a hurdle, we expect the crude oil futures to surpass this level and touch ₹7,800 in the near term. A breakout of this level can take the contract to ₹8,000, a resistance.
On the other hand, if the contract falls from here, it can find support at ₹7,000. Below this is the 20-day moving average support at ₹6,800. The price band of ₹6,700-6,800 is a support. A decline below ₹6,700 is less likely.
Only a break below ₹6,500 will turn the outlook bearish.
Trade strategy: Go long on crude oil futures at the current level of ₹7,284. Add more longs in case the contract dips to ₹7,050. Keep initial stop-loss at ₹6,700.
When the contract rises above ₹7,500, tighten the stop-loss to ₹7,300. On a rally to ₹7,800, raise the stop-loss further to ₹7,600. Book profits at ₹8,000.
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