Crude Oil prices reversed higher and have been trending up over the last ten days. The Crude Oil futures contract on the New York Mercantile Exchange (NYMEX) made a low of $64.5 per barrel on August 16 and has bounced higher from there. The contract has surged about 7 per cent from the low and is currently trading at $69 per barrel.
On the domestic front, the Crude Oil futures contract on the Multi Commodity Exchange (MCX) has also risen in tandem with the NYMEX prices during this period. The MCX-Crude Oil contract made a low of ₹4,525 per barrel on August 16 and has reversed sharply higher by about 7 per cent from there. It is currently trading at ₹4,838 per barrel.
The bounce-back from the August low is an initial sign that the downtrend in Crude Oil prices that has been in place since July has come to an end.
Downtrend halted: The recent bounce-back in the NYMEX-Crude Oil ($69 per barrel) contract is technically significant. The 200-week moving average at $65 had halted the downtrend that has been in place since July and triggered this reversal. This is turning the bias bullish. An immediate resistance point is at $70 and is likely to be tested in the near term. Inability to breach this hurdle can trigger a pull-back move to $68. But a strong break above $70 will boost the momentum. Such a break will bring fresh buying interest and will take the contract higher to $74 and $75 levels again. On the domestic front, the MCX-Crude Oil (₹4,838 per barrel) contract is hovering near an intermediate resistance level at ₹4,850.
A strong break above this hurdle will see the contract moving higher to revisit ₹5,100 and ₹5,200 levels in the coming days. A strong break and a decisive close above ₹5,200 will then increase the likelihood of the contract targeting ₹5,500 levels over the medium term. Traders with a medium-term perspective can go long at current levels and also accumulate at ₹4,775 and ₹4,725. Stop-loss can be placed at ₹4,450 for the target of ₹5,500. Note: The recommendations are based on technical analysis and there is a risk of loss in trading. Business Line
