Crude oil futures contract traded on the Multi Commodity Exchange (MCX) has been on a short-term downtrend since encountering a key resistance at ₹3,400 a barrel in early June.

This downtrend got strengthened as the contract emphatically breached a key support at ₹3,150 by tumbling 4 per cent on July 7.

However, the contract found support at the next key base level at ₹3,000 and has been trading above this level over the past two weeks.

On the upside, significant resistance at ₹3,150 is limiting the upside. The contract is stuck in a narrow range between ₹3,000 and ₹3,150. It was down by 0.6 per cent to trade at ₹3,084 on Thursday.

An emphatic fall below the immediate support at ₹3,000 will reinforce the bearish momentum and drag the contract down to ₹2,900 and then to ₹2,800 in the short-term.

Traders with a short-term perspective should tread with caution and initiate fresh short positions on a fall below ₹3,000 levels with a fixed stop-loss.

On the other hand, the contract needs to conclusively break the key resistances at ₹3,150 and ₹3,250 to alter the short-term downtrend and take it higher to ₹3,350 levels. Strong break out of the vital resistance at ₹3,400 will strengthen the medium-term uptrend that has been in place from the February low. Next targets are at ₹3,500 and ₹3,670 levels.

On the global front, WTI Crude Oil is in a short-term downtrend and currently tests a support at $44.5 per barrel.

Strong fall below this level can pull it down to $42 or even to $40 in the coming weeks. Significant resistances are placed at $48 and $50.

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