MCX Crude Oil futures likely to exhibit high volatility in the near term

Sustained trade below Rs 6,940-level, can trigger a sharp slide in MCX Crude Oil August futures; Bias for Natural Gas futures has turned marginally negative.

The MCX Crude Oil futures are likely to trade on a volatile note as the fight between the bulls and the bears is likely to get intense, with momentum oscillators showing signs of turning favourable on the daily chart, but remaining unfavourable on the weekly chart. On the other hand, the bias for Natural Gas futures has turned marginally negative.

Here's what expect from the two energy-based commodities in the near term:

Crude Oil

Bias: Volatility likely to rise

Last close: Rs 7,190

Near Resistance: Rs 7,290

Near Support: Rs 6,940

After days of perseverance, the MCX Crude Oil futures eventually broke the 200-DMA (Daily Moving Average) support last week, as the momentum favoured the bears. The Crude Oil futures dipped to a low of Rs 6,944 as against its 200-DMA of Rs 7,288.

The MCX Crude Oil August futures are currently seen testing resistance around the 200-DMA, and may be able to conquer the same as select momentum oscillators have now turned favourable. 

The 14-day RSI and the MACD are showing some signs of bottoming out, signaling a possibility of a pullback in Crude Oil prices.

However, on the weekly chart, MCX Crude is currently testing support around the 50-WMA at Rs 7,000-mark, along with its lower-end of the Bollinger Band at Rs 6,940-odd level. Momentum on the weekly chart, are yet to turn favourable. Hence, the greater probability seems of volatile trading sessions ahead as the fight between the bulls and bears may get intense.

In case, Crude Oil prices break and trade consistently below Rs 6,940-level, a sharp fall to Rs 5,650 level can be possible - which is its next major support (100-WMA). For now, the upside may be capped around Rs 8,100-level - its 50-WMA.

On Wednesday, the MCX Crude Oil August futures are likely to trade in a range of Rs 7,035 to Rs 7,345, with the commodity likely to seek support around Rs 7,135 - Rs 7,095 - 7,065; whereas on the upside the Crude Oil could face resistance around Rs 7,245 - 7,285 - 7,315. 

The weekly Fibonacci chart indicates a likely extension of the trading range this week to Rs 6,760 to Rs 6,555 on the downside, and Rs 7,400 to Rs 7,615 on the upside.

Natural Gas

Bias: Marginally Negative

Last close: Rs 620.40

Support: Rs 586.50, Rs 571.50

Near Resistance: Rs 631.30

The MCX Natural Gas futures were seen trending along with the 20-DMA for the last few trading sessions. While, the price-to-moving averages action is favourable both on the daily and the weekly charts, select momentum oscillators have turned negative; hence the commodity may face downward pressure in the near term.

The 20-DMA of the Natural Gas futures is at Rs 631.30, above which the next immediate hurdle could be at Rs 670 its recent high. On the downside, the commodity could seek support around its 50-DMA and 100-DMA at Rs 586.50 and Rs 571.50, respectively. As per the weekly chart, the 20-WMA support is seen at Rs 575.

Among the key momentum oscillators, the MACD on the daily chart has given a negative divergence and 14-day RSI is seen near the 50-odd level.

In case of accelerated selling pressure, the commodity could dip all the way to its lower-end of the Bollinger Band at Rs 522-odd level.

According to the weekly Fibonacci chart, the bias for the remainder of the week is likely to remain subdued as long as Natural Gas futures trade below Rs 642.30-level. On the downside, break and sustained trade below Rs 597.60 could give further ammunition to the bears. 

On Wednesday, as per the daily Fibonacci chart, MCX Natural Gas August futures are likely to trade in a range of Rs 609 to Rs 631.80. The commodity may seek support around Rs 616.40 - 613.40 - 611.20. On the upside, the Natural Gas futures are likely to face resistance around Rs 624.50 - 627.40 - 629.60.