Crude Oil Weekly Outlook 01 - 05.09.2014Back

Crude September contract on MCX inched 152 rupees up to settle at 5831. Crude has witnessed a nice recovery from horizontal support of 5650 and settled well near the upper end of previous week’s trading range. 10 weeks SMA has fallen below 20 weeks SMA and 50 weeks SMA and 20 weeks SMA is also falling and approaching 50 weeks SMA indicates weakness in this counter. MACD has also fallen below zero line with bearish cross and hints strong bearish hands. Stochastic has reached in oversold territory and has also witnessed a nice recovery to offload oversold readings. Price objective for bears is now placed at 5650 any sustained move below that level would bring more weakness and then it will trigger some sharp declines that will bring 5500-5400 on cards in intermediate time frame. Resistance is now seen near 5900 any sustained move above this level would bring some more charm and then we will see a rally towards 5960-6030 zones. Areas of 6030-50 will remain crucial and it would be difficult for bulls to cross above that level and we may see bearish reversal from areas of 6050 zones.

Crude Oil trading range for the week is expected among the key support at 5690 and resistance at 5840.

Recommendation:

· This week again buying crude on declines around 5750-5720 with stop loss below 5650 for targeting 5830-5900-5970 and more upside might be appropriate.

· In alternative scenario buying above 5840 with stop loss below 5800 for targeting 5900-5970 and more upside might be appropriate.

· Selling below 5639 with stop loss above 5690 for targeting 5550-5400 and more down side might be appropriate.