Crude oil posted marginal gain last week. Brent crude oil futures on the Intercontinental Exchange (ICE) was up 0.4 per cent as it closed at $78.6 per barrel. Crude oil futures on the MCX gained 0.6 per cent by ending the week at ₹6,106 a barrel.

Brent futures ($78.6)

Brent futures remained sideways over the past week. It was largely held between $77 and $79.

While there is a broader range within which the contract has been oscillating since the beginning of this year, which is between $75 and $80.

Going ahead, the direction of breach of the above-mentioned broader price band will lend us a clue about the next swing in price.

A breakout of $80 can turn the outlook positive. In such a case the contract can rally towards the resistance band of $83-85. Subsequent resistance is at $88.

But if Brent futures slip below $75, there is an immediate support at $73. A breach of $73 will open the door for a decline to $70.

MCX-Crude oil (₹6,106)

The February futures contract of crude oil has been fluctuating in the ₹5,900-6,250 range. The broader range is between ₹5,800 and ₹6,350.

Until either ₹5,800 or ₹6,350 is invalidated, the trend will remain uncertain. A breakout of ₹6,350 can result in an upswing to ₹6,800 and then to ₹7,000.

But if the contract breaks the support at ₹5,800, it will most probably fall to ₹5,500. This is a strong support on the back of which crude oil futures could recover sharply.

Trade strategy: MCX crude oil futures is currently hovering in the middle of a sideways band. Thus, the risk-reward ratio is unfavourable for both long and short positions.

Therefore, traders can refrain from trading for now. Initiate fresh positions along the direction of the break of the ₹5,800-6,350 range.

Related Topics
comment COMMENT NOW