Crude oil prices slumped last week and breached key supports. Brent crude oil futures on the Intercontinental Exchange (ICE) was down 3.8 per cent as it closed at $75.9 per barrel. Crude oil futures on the MCX lost 5.5 per cent and it ended the week at ₹5,935 a barrel.

Brent futures ($75.9)

Brent futures declined below the support band of $77-78 last week. This has turned the outlook bearish. Going ahead, the contract is likely to inch up towards the $77-78 region from here and then resume the decline.

The nearest support from the current level is the price band of $70-71. In the short term, Brent futures is likely to drop to these levels. If this level is breached, we could see another leg of downtrend. Support below $70 is at $62.

In case the contract rises above $78 from the current level, it can retest the barrier at $83.

MCX-Crude oil (₹5,935)

The December futures of crude oil was trading in the ₹6,000-6,650 range for the past one month. But last week, it fell below the support band of ₹6,000-6,070. This has opened the door for further decline in the upcoming sessions. The immediate support from the current level is at ₹5,500.

But before falling to that level, crude oil futures is likely to move up to ₹6,100 and then resume the downswing. In case the contract rises past ₹6,100, the upswing will most probably extend to ₹6,500.

The trend will become bullish only if crude oil futures surpass the hurdle at ₹6,650. However, this is unlikely to happen as the bears continue to hold the upper hand.

Trade strategy: Traders can consider fresh short positions. Short the contract at the current level of ₹5,935 and add shorts in case the price rises to ₹6,100. Place stop-loss at ₹6,300 initially.

When the contract falls below ₹5,700, tighten the stop-loss to ₹5,900. Exit at ₹5,500.