At the international front, WTI crude oil is forming reverse head and shoulder, with US$94/bbl enacting as a neckline (resistance). Crude oil prices have been constrained in the range $87.60-94/bbl during the past few weeks. At this juncture, prices have been successful in consistently trading above US$90/bbl and can witness further upside till US$94 in the coming days. Further, a break above US$94/bbl could pave the path for prices testing the highs of US$96-98/bbl.
Turnaround could be seen in case prices settle below $90/bbl and head towards the recent low of $88/bbl. From the medium term perspective, US$86.8 acts as a strong support in the event of any weakness.
In the domestic front, MCX Crude Oil November contract is holding above Rs4,800/bbl. RSI is pointing towards a prospect of prices moving higher in near term. Rs5,050/bbl is working as immediate resistance. Breach of the same can materialize in to a probability of prices moving towards the high of Rs5,270/bbl. In addition, there is considerable increase in the open interest, which also corroborates the positive stance on prices.
Turnaround could be seen as and when market approaches and breaks below the recent low of Rs4,800/bbl. Eventually, this would lead to further weakness towards Rs4,600/bbl.
Price outlook and Strategy
|Markets||Current price||Trading range||Buy Levels||Target||Stop loss|
|NYMEX Crude Oil Decâ€™12||US$92.4||US$87-US$98||--||--||--|
|MCX Crude Oil Novâ€™12||Rs4,911||Rs4,700-5,250||4,850-4,900||5,100-5,200||4,650|
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