Bulls seem to have taken a break after lifting the price of crude oil futures from about ₹2,600 in November last year to a high of ₹4,985 early this month.
But from the highs, the price has moderated and is now tracing a sideways trend. For the past two weeks or so, the April futures contract of crude oil has been oscillating between ₹4,650 and ₹4,850.
Due to the lack of a trend over the past couple of weeks, indicators like the relative strength index (RSI) and the moving average convergence divergence (MACD) on the daily chart came off its highs, hinting that the uptrend is losing strength.
But this is not an indication of trend reversal and the average directional index shows that both bulls and bears are struggling to establish a trend in their favour.
Also, the RSI and the MACD continue to stay in their respective bullish territory.
Moreover, the contract has a support band between ₹4,635 and ₹4,650; the 21-day moving average (DMA) lies between these levels, making the support a significant one. Until the price stays above these levels, the trend will be inclined to the upside. Interestingly, the contract has bounced off the 21-DMA support thrice since the beginning of the year.
Considering these factors, MCX crude oil futures is well placed to witness a bounce and so, traders can go long with stop-loss at ₹4,550. The contract is likely to retest the previous high of ₹4,985.