Crude oil: Set to fire up again

The MCX crude oil futures contract has been on a downtrend since the end of June. The contract has tumbled about 13 per cent from its high of ₹6,499 per barrel recorded on June 23 to ₹5,679 per barrel now. There is not much room for a downside from here, a crucial and strong trend line support is coming up near ₹5,500.

On the global front as well, the crude oil futures contract, which is currently trading at $93.3 per barrel on NYMEX, has important supports coming up at $90 and $88.

The probability is high for it to reverse higher from these support levels. Such a reversal can take the price higher once again to $100 and $110 in the medium term.

The MCX-crude oil futures contract, which moves in tandem with the NYMEX-crude oil, is also expected to reverse higher. Traders with a medium-term perspective can go long in the MCX-crude oil futures contract. Stop-loss can be kept at ₹5,150 for the target of ₹6,400.

Even if the contract declines below its support at ₹5,500, the downside could be limited to the 200-week moving average support level at ₹5,200. Having said this, intermediate declines to ₹5,200, if seen, can be used to accumulate more long positions.

The psychological level of ₹6,000 is a key resistance for the contract now. A strong break above this level can take it higher to ₹6,500 in the medium term.

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