Crude oil ended the week with a gain on the back of the rally on Friday. Brent crude oil futures on the Intercontinental Exchange (ICE) was up 1.6 per cent by closing at $87 per barrel. Crude oil futures on the MCX was up 2.4 per cent by ending the week at ₹6,909 a barrel.
Brent Crude futures ($87)
Brent Crude futures’ price action shows that it has formed a good base at $85. So, we anticipate it to begin a leg of uptrend from here anytime.
Immediately below $85, the contract has a support at $84 and $81. The medium-term trend will remain bullish as long as $81 remains valid. Support below this is at $77 and $75.
On the upside, Brent crude futures can face a hurdle at $90. But we expect it to surpass this level. Barriers above $90 are at $93 and $100.
MCX-Crude oil (₹6,909)
The April crude oil futures retained the bullish bias by staying above the support at ₹6,700. Also, it trades above the 20-day moving average (DMA), which is currently at ₹6,660. So, the price region between ₹6,660 and ₹6,700 is a support zone.
The price action hints that the contract will soon hit ₹7,000. A breakout of this can lift the contract to ₹7,500 and then to ₹8,000. There could be a price correction either from ₹7,500 or ₹8,000.
Alternatively, if crude oil futures fall and break below the support at ₹6,700, the downswing could extend to ₹6,500 – its 50-DMA. A breach of this can turn the trend bearish. The nearest notable support below ₹6,500 is at ₹6,250 and ₹6,000.
Trade strategy: Retain April futures long executed at ₹6,680. Raise the stop-loss a little to ₹6,680 from the existing ₹6,650. Likewise, revise the target slightly higher to ₹7,000 from ₹6,950.
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