Crude oil prices went up last week. The Brent crude oil futures on the Intercontinental Exchange (ICE) gained 4.3 per cent and ended the week at $74.7 per barrel. Similarly, the crude oil futures on the MCX was up 4.4 per cent as it closed the week at ₹5,975 a barrel.
Brent futures ($74.7)
Brent Crude futures gained last week, after ending the preceding week on a flat note. The chart shows that the contract has formed a morning star candlestick pattern. This hints at bullish trend reversal.
The nearest resistance is at $76. A breakout of this can lift the contract to $80. On the other hand, if the contract resumes the decline, the support at $70 can arrest the fall. A breach of this base can trigger another leg of downtrend. Nearest support below $70 is at $62.
MCX- Crude oil (₹5,975)
The October crude oil futures has been moving up over the past few days after taking support at ₹5,500 early this month. By closing last week with a gain, the contract has formed a morning star candlestick pattern. Thus, the likelihood of a rally is high.
Yet, there is a resistance at ₹6,000. If this level is invalidated, crude oil futures can rally to ₹6,500. Resistance above ₹6,500 can be spotted at ₹6,800. The price band of ₹6,800-7,000 is a potential barrier.
On the other hand, if the contract falls from here, it can find support at ₹5,700. Subsequent support is at ₹5,500. Note that ₹5,500 is a key base.
Trading strategy: Buy crude oil futures with a stop-loss at ₹5,800 if it breaks out of ₹6,000. When the contract rises to ₹6,300, tighten the stop-loss to ₹6,100. Exit at ₹6,500.
