The dollar rally did not weigh on crude oil prices. In fact, the Brent crude oil futures on the Intercontinental Exchange (ICE) ($75.2/barrel) appreciated 5.9 per cent. The crude oil futures on the MCX (₹6,028/barrel) was up 6.1 per cent.

Brent futures ($75.2)

Brent crude futures saw an uptick on the back of $70.50, which has been acting as a good base for the past two months. However, the rally did not have the strength and momentum to lift the contract above the key resistance at $76.

The chart shows that Brent futures has been oscillating in the $70.50-76 range for over a month, indicating that bulls and bears are fighting it out to take control. Until either of the boundaries are breached, the path of the next trend will remain ambiguous.

The nearest resistance above $76 is at $80.50 whereas the immediate support below $70.50 is $68.50.

MCX-Crude oil (₹6,028)

The December crude oil futures bounced off the support at ₹5,650 and the price rose above both 20- and 50-day moving averages last week. But it is to be noted that the contract is below an important resistance at ₹6,100.

Since mid-October, crude oil futures has been held between ₹5,650 and ₹6,100. There is a lack of momentum on both sides of the trade. Since the contract is range bound, we cannot be sure about the direction of the next leg of trend.

If bulls can extend last week’s rally beyond ₹6,100, the contract can touch ₹6,425. It can also rise to ₹6,700. But if the crude futures break the support at ₹5,650, it may decline to ₹5,500. Depending on the bears’ power, the downside can extend up to ₹5,000.

Trade strategy: We suggest staying out because the contract is range bound.

Related Topics