Crude oil extended the decline over the past week. Brent crude oil futures on the Intercontinental Exchange (ICE) was down 2.1 per cent as it closed at $79.6 per barrel, whereas crude oil futures on the MCX lost 2 per cent by ending the week at ₹6,323 a barrel.

Brent futures ($79.6)

Brent crude futures broke below the lower end of the range and depreciated to mark a low of $76.7. But it recouped some of its losses by recovering to $79.6.

Although the price action appears bearish, Brent futures has a support at $77. At the same time, there is a resistance at $81. Therefore, the next leg of trend depends on which among $77 and $81 breaks first.

Supports below $77 are at $73 and $70. On the other hand, resistances above $81 are at $84 and $90.

MCX-Crude oil (₹6,323)

Crude oil futures (June expiry) dropped below the range of ₹6,400-6,650 early last week. But after marking an intraweek low of ₹6,073, it moved up to close the week at ₹6,323.

A break below the above-mentioned range is a bearish sign. Moreover, the crude oil futures stays below the 20-day moving average, which is currently at ₹6,460.

So, if the bears drag the contract from here this week, it can find support at ₹6,000. A breach of this can intensify the sell-off, potentially leading to a fall to ₹5,550.

On the other hand, if crude oil futures rally from here, it will face a series of resistances. The nearest one is at ₹6,400 followed by ₹6,460. Subsequent one is at ₹6,700. Only a breakout of ₹6,700 can turn the trend bullish again.

Trade strategy: At the moment, the risk-reward ratio is not favourable for short positions even though the contract exhibits bearish bias. Refrain from taking fresh trades at current prices.