MCX-crude oil contract has plummeted over 13 per cent in the last couple of weeks. The contract tumbled 10 per cent last week and declined below the psychological ₹3,000 per barrel mark. However, the contract is nearing crucial supports which can halt the current fall. The 200-day moving average at ₹2,918 per barrel, a trend line at ₹2,860 and the 55-week moving average at ₹2,825 are the key supports. Though a test of these supports looks likely in the near-term, there is a strong likelihood of the contract reversing higher from either of these levels. Such a reversal may take the contract higher to ₹3,100 and ₹3,150 initially. It will also keep the broader outlook positive and the contract can revisit ₹3,400 and ₹3,500. Traders should tread with caution. However, long positions can be initiated after the contract reverses strongly above ₹2,900 after testing either ₹2,860 or ₹2,825. Stop-loss can be placed at ₹2,730 for the target of ₹3,100. But if the contract breaks below ₹2,825 decisively, it can extend the fall to ₹2,700.

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