Bias negative for MCX Crude Oil; Natural Gas may slide below Rs 500-mark

The bias for MCX Crude Oil September futures is likely to favour the bears as long as the commodity trades below Rs 7,170; For MCX Natural Gas futures the key support range of Rs 630 - Rs 620.

The bias for MCX Crude Oil September futures is likely to remain negative as long as the contract trades below Rs 7,170-level; Similarly, the upside for Natural Gas futures seems capped around Rs 718. On the downside a steep fall towards it 200-DMA cannot be ruled out.

Crude Oil

Bias: Negative

Last close: Rs 6,928

Resistance: Rs 7,170

Support: Rs 6,600; Rs 5,800

The MCX Crude Oil futures have been trading below the key - 20, 50, 100 and 200-DMA (Daily Moving Averages) for the last five straight trading sessions. Further, the 20-DMA (Rs 7,251) is below 50, 100 and 200-DMAs, thus indicating that the price-to-moving averages action is negative in the short-term.

The only saving factor for MCX Crude Oil futures is the fact that the 100-DMA (Rs 8,087) still holds above the 200-DMA placed at Rs 7,417.

To add to the woes, Crude Oil futures seem to be struggling on the weekly chart, with persistent resistance seen around the 50-WMA (Weekly Moving Average) at Rs 7,170-odd level. The weekly chart indicates some support around the lower-end of the Bollinger Band at Rs 6,600-odd level, below which a steep fall towards Rs 5,800-level seems likely - its 100-WMA.

Among the key momentum oscillators on the weekly chart, the MACD is clearly in favour of the bears, while the Slow Stochastic and RSI were seen in oversold zone.

According to the weekly Fibonacci chart, MCX Crude Oil futures could test support on the downside around Rs 6,765 - Rs 6,625 - Rs 6,425 during the week. Whereas, on the upside, Crude Oil futures need to sustain above Rs 7,140 for fresh strength to emerge. 

On Wednesday, the MCX Crude Oil September futures may move in a range of Rs 6,770 to Rs 7,090, wherein the energy-based commodity could seek support around Rs 6,870 - Rs 6,830 - Rs 6,800; whereas on the upside the Crude Oil contract is likely to face resistance around Rs 6,985 - Rs 7,025 - Rs 7,090. 

Natural Gas

Bias: Neutral

Last close: Rs 653.30

Support: Rs 630, Rs 620

Resistance: Rs 718

Despite the recent sharp fall of over 18 per cent from a high of Rs 801 on August 23 to a low of Rs 652 on Tuesday, the broader trend for the MCX Natural Gas futures based on the price-to-moving averages remains positive, as the 20-DMA (Rs 718) stands fairly above the 50, 100 and 200-DMAs, placed at Rs 631, Rs 619 and Rs 484, respectively.

Having said that, the momentum oscillators indicate a negative picture, with the MACD strongly in favour of the bears, both on the daily and the weekly charts.

For now, Natural Gas futures seem headed towards the multiple support area of Rs 620 to Rs 630, apart from the 50 and 100-DMAs, the 20-WMA also stands at Rs 620. Thus, this support area is the key for Natural Gas futures in the near term. 

In case, Natural Gas futures violate this support zone, a steeper fall to sub Rs 500-level cannot be ruled out. On the upside, the energy-based commodity is expected to face considerable resistance around Rs 718-level - its 20-DMA.

According to the weekly Fibonacci chart, Natural Gas futures have given a clear sell signal on the weekly scale. The bias for the remainder of the week is likely to remain bearish as long as the commodity trades below Rs 690-level. 

On Wednesday, as per the daily Fibonacci chart, MCX Natural Gas September futures are likely to trade in a range of Rs 619.30 to Rs 687.30. The September contract may seek support around Rs 641.20 - Rs 632.30 - Rs 625.90. On the upside, the Natural Gas futures are likely to face resistance around Rs 665.40 - Rs 674.30 - Rs 680.80.