MCX Crude Oil range narrows; Natural Gas up 39% from lows; what next?

The Bollinger Bands suggest a likely trading range of Rs 6,070 - Rs 6,650 for the MCX Crude Oil futures; whereas, Natural Gas futures need to sustain above Rs 231 for the pullback to continue.

The MCX Crude Oil futures continue to exhibit a range-bound trade with the anticipated trading band now getting narrowed down to Rs 600-odd range. Meanwhile, after a sharp fall of 72 per cent Natural Gas futures have finally witnessed a notable pullback rally in the last one week or so.

Here's how these two energy-based commodities are placed on the charts.

MCX Crude Oil

Bias: Range-bound

Last close: Rs 6,402

Indicative Range: Rs 6,070 - Rs 6,650

For the fourth time in the last three months, the MCX Crude Oil futures bounced back after testing support at the lower-end of the Bollinger Band on the daily chart.

The trading band from Rs 7,000 to Rs 5,900 since the end of November 2022 has now narrowed down to Rs 6,650 to Rs 6,070. Currently, Crude Oil futures are placed at mid-point, and seem to be on course to again test the higher-end of the anticipated range. 

The short-term key moving averages i.e. the 20-DMA (Daily Moving Average) and the 50-DMA are drawing an almost flat line around the Rs 6,400-odd level. The broader trend continues to remain range-bound, with maximum upside capped around Rs 7,200-level.

Select key momentum oscillators on the weekly chart are marginally in favour of the bulls. Hence, the possibility of a breakout on the upside cannot be ruled out. For early signs of a breakout, Crude Oil futures will need to conquer Rs 6,600 level on a weekly closing basis.

As per the weekly Fibonacci chart, the MCX Crude Oil prices may counter resistance around Rs 6,470 - Rs 6,505 - Rs 6,540 on the upside this week. Whereas, on the downside, the contract may seek support around Rs 6,290 - Rs 6,240 - Rs 6,170.

On Wednesday, as per the daily Fibonacci chart, the MCX Crude Oil March futures may seek support around Rs 6,370 - Rs 6,345 - Rs 6,310. On the upside, the Crude Oil prices are likely to face resistance around Rs 6,460 - Rs 6,475 - Rs 6,490.

MCX Natural Gas

Bias: Negative

Last close: Rs 219.50

Support: Rs 204

Resistance: Rs 231

After a steep fall of almost 72 per cent in little more than two months, the MCX Natural Gas futures seem to finally witness some relief rally. The March contract has gained nearly 39 per cent from its intra-day low of Rs 163.40 hit on February 22, 2023.

Natural Gas prices are presently testing resistance around the higher-end of the Bollinger Band on the daily chart at Rs 230-odd level. Break and sustained trade above the same, can trigger a rally towards the 50-DMA, placed at Rs 273.

In case of a dip, Natural Gas futures are likely to seek support around the 20-DMA at Rs 204, or could dip all-the-way towards the lower-end of the Bollinger Band at Rs 177.

Having said, the broader outlook for Natural Gas remains bearish as the commodity is trading below the key moving averages both on the daily and weekly charts. In fact, the 20-WMA (Weekly Moving Average) is now below the 50- and 100-WMA, which indicates that the bearish bias may prevail for quite some time.

However, given the oversold condition on the weekly chart, the commodity may look to recoup some of the lost ground. The nearest major hurdle for the energy-based commodity is placed at Rs 287 - its 200-WMA, on the weekly chart. 

According to the weekly Fibonacci chart, above Rs 231, the commodity can spurt to Rs 236.70 - Rs 242.50. On the downside, the Rs 212 level remains the major support for the remainder of the week.

On Wednesday, as per the daily Fibonacci chart, the MCX Natural Gas March futures could seek support around Rs 216.70 - Rs 214.60 - Rs 211.60; whereas, on the upside, the commodity needs to sustain above Rs 224.40 for the positive momentum to continue.