Crude oil prices rallied over the past week. Brent crude oil futures on the Intercontinental Exchange (ICE) gained 2.4 per cent as it closed at $83.6 per barrel. Crude oil futures on the MCX was up 4.5 per cent by ending the week at ₹6,638 a barrel.

Brent futures ($83.6)

Brent futures continues to oscillate in the range of $81-84. Unless the contract moves out of the range, we cannot confirm the next leg of trend.

That said, the price action shows some positive bias. If Brent futures breaks out of $84, we could see a swift rally to $90, a resistance. Above this level, there are barriers at $93 and $100.

On the other hand, if the contract falls below the support at $81, it could extend the decline to $79. Most probably, there will be a bounce off this level. However, if $79 is invalidated, Brent futures could see a dip to $73.

MCX-Crude oil (₹6,638)

The March futures contract of crude oil was trading in the range of ₹6,300-6,520 for nearly three weeks. But last Friday, the contract moved up sharply, leading to the breakout of the range. Notably, MCX crude futures has broken out without Brent futures witnessing such a move.

Now, the trend has turned positive for MCX crude futures. The price action on the daily chart indicates further rally from the current level. While ₹6,800 is the nearest barrier, we expect the contract to touch ₹7,000 in the near term.

In case the breakout turns out to be a false one — the contract falls back below ₹6,520, it can decline to ₹6,300, the bottom of the range. A breach of this can turn the trend bearish. However, as it stands, the probability of a rally is high.

Trade strategy: Last week, we suggested buying crude oil futures on a breakout of ₹6,520. Hold this trade and retain the stop-loss at ₹6,300. When the contract touches ₹6,800, tighten the stop-loss to ₹6,625. Book profits at ₹6,950.