Crude oil prices have fallen over the past week. Brent crude oil futures on the Intercontinental Exchange (ICE) lost 3.9 percent to end the week at $73.1 per barrel. Similarly, crude oil futures on the MCX fell 0.9 per cent to close the week at ₹5,988 per barrel.
Brent futures ($73.1)
Brent Crude futures recovered after opening with a gap down last week. But the strength of the rally was not enough to lift the price above the $75 resistance. Likewise, selling pressure was well dodged by the $70 support.
Essentially, the next part of the trend depends on which of the $70 and $75 contracts breaks first.
A breakout of $75 could take the contract to $80. But if the support at $70 is removed, there is immediate support at $68. A break below this could intensify the sell-off, potentially dragging the contract towards the $60-62 price range.
MCX crude (₹5,988)
November crude oil futures fell in the first two sessions last week. But since Wednesday it has risen again.
However, the contract failed to cross the ₹6,050 hurdle. That said, the support at ₹5,630 is holding well so far.
If crude oil futures breach ₹6,050, there could be a quick rally to ₹6,450, while a decline from current levels could take the contract to ₹5,630. Below this level there is another key support at ₹5,500.
Trading Strategy: Since crude oil futures are now close to resistance, you can go short with a stop-loss of ₹6,130. Book profit for ₹5,630.
If the stop-loss of the above short trades is reached, it could mean a breach of the ₹6,050 resistance. In such a scenario, consider going long with a stop-loss of ₹5,880. Exit at ₹6,450.
