Crude oil prices were down last week after witnessing some volatility. The Brent crude oil futures on the Intercontinental Exchange (ICE) ended the week at $79.1 per barrel, losing 0.7 per cent. The crude oil futures on the MCX was down 1 per cent as it closed the week at ₹6,293 a barrel.
Brent futures ($79.1)
Brent Crude futures declined in the first half of last week. But the contract rebounded from the support at $76. It also closed above the 20-day moving average, which is now at $78.8.
However, the recovery can be capped at $82, a resistance. Both 50- and 200-day moving averages lie at $82, making it a strong barrier.
Therefore, the chances of Brent crude oil futures remaining within $76 and $82 for some time are high. The direction of the break of the $76-82 range can give us a clue about the next leg of trend.
MCX-Crude oil (₹6,293)
The September crude oil futures depreciated until Wednesday. As the contract found support at ₹6,000, it rebounded. Despite rallying in the last couple of sessions, the contract posted negative weekly return.
In case the upswing extends from the current level, it is less likely to go beyond the resistance at ₹6,600. The prevailing price action hints that the contract might consolidate between ₹6,000 and ₹6,600 in the near term.
If the contract moves above ₹6,600, it can face resistance between ₹6,850 and ₹7,000. A breach of ₹7,000 can lead to a rally to ₹7,300. On the other hand, if the price slips below ₹6,000, it can decline to ₹5,850 and then possibly to ₹5,700.
Trade strategy: We suggest staying out until either ₹6,000 or ₹6,600 is breached. Traders can initiate positions along the direction of the break of this price band.