Crude oil prices declined for the second week in a row. The Brent crude oil futures on the Intercontinental Exchange (ICE) lost 2.9 per cent and ended the week at $82.6 per barrel. Similarly, the crude oil futures on the MCX was down 2.7 per cent as it closed the week at ₹6,612 a barrel.

Brent futures ($82.6)

Brent Crude futures broke below the support at $84, leading to it making a lower low. The price action indicates that the downtrend retains good momentum, and that further fall is likely.

The nearest support is $81. A breach of this level can extend the downswing to ₹77, a strong base. A decline below this is less likely.

On the other hand, if the contract recovers from here and gets past $84, it can go up to $86, a minor hurdle. Notable resistance above $86 is at $88.

MCX-Crude oil (₹6,612)

The August crude oil futures slipped below the support at ₹6,700 last week. Although it is currently hovering around the 50-day moving average, a potential support, we expect the fall to extend further.

Considering the momentum, the contract can dip to ₹6,200, a support. But a decline below this is less likely. However, if the crude oil futures rebound from the current market price and reclaim the ₹6,700-mark, it can see a rally to ₹6,900.

The price region between ₹6,900 and ₹7,000 is a resistance zone and so, a move beyond this is unlikely to occur this week. In case it happens, it can trigger a fresh leg of upswing, potentially to ₹7,500.

Trade strategy: Since there is a chance for a decline from here, go short now at ₹6,610 with a stop-loss at ₹6,800. When the contract touches ₹6,400, tighten the stop-loss to ₹6,600. Book profits at ₹6,200.

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