Ever since the multi-year low was tested by crude oil in February this year prices embarked on a strong trend reversal as suggested in our previous blog. The reversal was contributed by a number of factors like falling oil production from US, Increased global demand for oil, Canada fire and now tension in Libya and Nigeria.
MCX Crude oil prices has witnessed tremendous downside in less than two years of span. While 1800 levels were tested in Feb’16 this year we saw a strong pull back in prices to the tune of 80% rally from 1800 levels. The prices now are entering into strong resistance zone of 3300 – 3500 levels on MCX. While weekly MACD indicator remains strong, we still believe that it would be difficult for prices to breach this resistance zone going forward.
We at COMMTATHYA believe that there is still space for another 5%-7% upside in prices but the trend reversal would surely pitch in around 3500 levels. Long term serious investors should stay cautious and divert their attention towards changing the course as soon as commodity market news flow in to validate the downward trajectory.