With MCX Crude Oil below Rs 7,050, bears likely to reign; charts suggest

The MCX Crude Oil October futures may see a directional move on breakout from the Rs 6,550-6,900 trading range so far this week. Short-term trend for Natural Gas futures may soon turn negative.

A breakout from the Rs 6,550 - Rs 6,900 range, is likely to set the direction for the MCX Crude Oil futures this week. Whereas, in case of Natural Gas prices, charts indicate that conditions are turning more favourable towards the bears. That apart, the US Federal Reserve rate decision on Wednesday night could have a major impact on the trend.
 

Crude Oil

Bias: Negative

Last close: Rs 6,762

Resistance: Rs 7,050

Support: Rs 6,460

The MCX Crude Oil futures have been trading with a negative bias for more than three months now, ever since the breakdown in mid-June. During the period, the commodity has declined around 28 per cent from its June 16 close of Rs 9,164.

The overall trend, basis on the price-to-moving averages action remains negative as such as that the exiting price of MCX Crude Oil October futures is fairly below all the key moving averages. 

However, the select key momentum oscillators seemed to have turned neutral, hence one shall wait and watch for a confirm signal for the likely trend ahead. 

For now, the MCX Crude Oil futures seems to be seeking support around the lower-end of the Bollinger Band on the daily chart, which stands at Rs 6,460. On the downside, Crude Oil prices are likely to find considerable support around Rs 6,280 and Rs 5,875, i.e. the lower-end of the Bollinger Band on the weekly chart and the 100-WMA (Weekly Moving Average).

On the upside, the Rs 7,050-level (20-DMA) seems the immediate hurdle for the commodity. Above which, Crude Oil prices can spurt to Rs 7,325 and Rs 7,500 levels - 50-DMA and 200-DMA (Daily Moving Average), respectively.

According to the weekly Fibonacci chart, the MCX Crude Oil October futures have so far moved in a broad trading range of Rs 6,550 - Rs 6,900. For the week ahead, a breakout from this trading range could set the direction for the energy-based commodity. 

On Wednesday, the MCX Crude Oil October futures may trade in a range of Rs 6,620 to Rs 6,905, wherein the commodity is likely to seek support around Rs 6,710 - Rs 6,670 - Rs 6,645. On the upside, the Crude Oil contract may face resistance around Rs 6,815 - Rs 6,850 - Rs 6,880. 

Natural Gas

Bias: Tentatively Negative

Last close: Rs 619.30

Support: Rs 583

Resistance: Rs 665; Rs 685.50

After having survived the 100-DMA scare early this month, the MCX Natural Gas September futures finally broke below the same and also ended lower in the first two trading sessions of this week. The 100-DMA is placed at Rs 630.

Further, Natural Gas prices are also seen trading below the 20-WMA, placed at Rs 625.20. To add to the negativities, the 20-DMA is seen closing on the 50-DMA for a likely slip below it. Currently, the 20-DMA stands at Rs 685.50, while the 50-DMA is at Rs 665. As and when, the 20-DMA slips below 50-DMA the short-term trend shall turn negative.

Among the key momentum oscillators, the 14-day RSI and the Slow Stochastic are in oversold zone, while the ADX remains strong. Thus, in case, of a directional move, a robust price movement seems to be on cards.

Technically, the Natural Gas September futures while struggling around the Rs 625-level, will be hoping to seek support around the lower-end of the Bollinger Band at Rs 583 on the daily chart. Break and sustained trade below the same, can trigger a sharper slide to Rs 500 - Rs 480-odd levels.

According to the weekly Fibonacci chart, Natural Gas prices so far this week have broken the support at Rs 597, and also resistance at Rs 633.40. Thus, we may witness more volatility going ahead this week. On the downside, the energy-based commodity could slip to Rs 585.60 - Rs 574.30; whereas on the upside, the September contract could jump to Rs 654.40 - Rs 670 - Rs 692.50.

On Wednesday, as per the daily Fibonacci chart, MCX Natural Gas September futures are expected to trade in a range of Rs 603.70 to Rs 634.50. The contract may seek support around Rs 609.50 - Rs 606.60, while may face resistance around Rs 628.70 - Rs 631.60.