Crude oil prices gained considerably last week. Brent crude oil futures on the Intercontinental Exchange (ICE) was up 6.6 per cent as it closed at $83.8 per barrel. Crude oil futures on the MCX gained 4.5 per cent by ending the week at ₹6,381 a barrel.

Brent futures ($83.8)

Brent futures, after witnessing a muted opening early last week, gathered strong upward momentum in the later half. It broke out of the resistance at $80 and $83.

The price action on the daily chart shows that the contract has formed higher high and higher low, a bullish sign.

As it stands, the upside will most likely continue until $88. If this level is taken out, the contract could extend the upswing to $93, a resistance. Subsequent barrier is at $97.

On the other hand, if the contract falls from here, it can find support between $79 and $81. Below this, $76 is the nearest support.

MCX-Crude oil (₹6,381)

The February futures contract of crude oil broke out of the resistance at ₹6,350 last week. This has turned the short-term trend positive.

There could be a corrective decline from the current level, probably to the price band of ₹6,250-6,300. Thereafter, the contract is expected to resume the rally and move towards ₹6,800 and then possibly to ₹7,000.

If crude oil futures declines below ₹6,250, it can find support at ₹6,150 and ₹5,900. The trend will turn bearish again only if the contract falls below the next support at ₹5,800. In the near term, bulls are expected to stay strong.

Trade strategy: Buy crude oil futures at the current level of around ₹6,380. Add longs in case the price dips to ₹6,280. Place initial stop-loss at ₹6,000.

When the contract touches ₹6,800, tighten the stop-loss to ₹6,550. Book profits at ₹7,000.