Brent crude prices are now currently taking support on the congruence of 4 short- long term moving averages (13ema, 34ema, 50sma & 100sma). The momentum indicator KST which often gives dominant trend within the prevalent trend cycle indicate an uptrend. And a positive surprise is that KST indicator has just crossed the zero line and has given a breakout & crossover in the overbought zone thus hinting at the strong bullish tone in the oil sector.
MCX Crude daily chart shows a price trending perfectly in a horizontal channel, with a tilt towards downside. In fact in MCX crude trades can be taken very easily as prices are perfectly modulating within the support and resistance area within the channeled parallel trend lines. Trend channel is a perfect technique and simplest to trade with the prevailing/existing trend. MCX crude will find resistance in price at 5630, 5450, & 5300.
While MCX crude has good support at 4700, 4990, 4617. The moving averages 34ema & 50 sma are giving perfect support and also acting as resistance to the MCX crude prices on daily chart. The rally from 4682 to 5248 in has been on declining volumes. Bullish traders need to be cautious. The momentum Indicator stochastic is near the upper extreme of 100 and hinting at flattening, which would indicate a slow in velocity. Slow stochastic also hint at negative divergence.
Technical conclusion: Negative divergence in momentum indicator, declining volumes on price rise make a case for reversal in near period in MCX Crude. Bullish traders need to protect their longs, and bearish traders need to judge the technical landscape before taking new shorts.
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Suchita holds a Bachelor of Science Degree from MSU University, Baroda, Diploma in Financial Management from Xavier's Institute of Management, Mumbai and has undergone Comprehensive Program on Technicals Analysis from Bombay stock exchange. ...
