BL Research Bureau:
Crude oil futures traded on the Multi Commodity Exchange (MCX) have found support at around Rs. 2,720/barrel in late-January and moved sideways forming a double bottom pattern with neckline at Rs. 3,300 levels. In mid-April, the contract decisively broke out of this bullish reversal pattern and continued to trend northwards. The contract achieved the pattern price target of Rs. 3,900 last week and is currently hovering around this level. Moreover, the contract faces a key long-term resistance in the band between Rs. 4,000 and Rs. 4,150 which is crucial trend deciding level. An emphatic break out of this resistance band is required to strengthen the uptrend and take the contract northwards to Rs. 4,500 in the medium term.
As the contract’s daily indicators and oscillators are loosing bullish momentum, there is a threat of a near-term corrective decline can happen. Such inability to break the key resistance band can pull the contract down to Rs. 3,700 and then to Rs. 3,500 levels. Traders with a short-term perspective with high risk appetite can initiate short position on such downward reversal with a stop-loss at Rs. 4,000.
MCX natural gas : MCX natural gas futures took support at Rs. 155 per mmBtu in early and late-April and started to trend upwards. Subsequently, the contract breached its 21- and 50-day moving averages and a key resistance at Rs. 170. Short-term trend is up. The contract now hovers around Rs. 186. On going, the uptrend can extend and reach the price targets of Rs. 200 and then Rs. 205 in the short term. Traders can initiate long position with a stop-loss at Rs. 180. Significant support below Rs. 180 is at Rs. 170 and then in the band between Rs. 155-160.