September futures contract of crude oil in Multi Commodity Exchange (MCX) has been trading in the range of ₹3,845 and ₹4,075 over the past two weeks. The contract failed to move past the a hurdle at ₹4,075, thrice, within the past month, making this resistance level very crucial.

On Friday, the contract made an intra-day high of ₹4,074 before falling to a low of ₹3,921 and closing the day at ₹3,967. As long as the contract trades below the resistance at ₹4,075, the long-term trend will remain bearish. The nearest support for the contract is at ₹3,925 — the 20-day moving average.

On the other hand, the broad negative sentiment for crude oil is diminishing of late, and if the contract breaks above the upper boundary of the consolidation range (₹4,075), it can encounter the hurdle at ₹4,195. If the momentum sustains, and the contract breaches ₹4,195, it can rally towards ₹4,300 levels quickly. Alternatively, if the price declines and breaks below the lower boundary of the consolidation range (₹3,845), the sell-off could intensify and drag the contract to ₹3,690 and even lower to ₹3,625 over the medium term. In the current scenario, traders should tread with caution and can wait until the contract breaks out of the consolidation range.

Global trend

Generic First Brent Crude futures have been oscillating between $58 and $60. The overall trend of the commodity is still bearish, and it has failed to move past its 20-day moving average resistance at $59.20. Hence, on further weakness, if the key support at $58 is breached, the price will decline to the support zone between $55 and $56.15. Below those levels, the price may fall to $51 levels.

On the other hand, if the price breaks above the crucial level of $60 decisively, the commodity futures can move up to the zone between $62 and $63 where it may face selling pressure. If it manages to move past those levels, it can appreciate to $67 over the medium term.

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