The continuous futures contract of crude oil on the Multi Commodity Exchange (MCX) has been able to produce good returns so far this year. That is, it has gained nearly a substantial 54 per cent as it rose from ₹3,524 by the end of last year to ₹5,417 (Tuesday’s closing price) although it witnessed a consolidation phase between March and May. The latest stretch of up-move began towards the end of May from about ₹4,550, which provided support for the contract.
No hope for bears
Even as the nearest expiry (July contract) has been vacillating in a tight range over the past few trading sessions, the price action on the daily chart remains bullish and until the price stays above ₹5,350, there is no hope for the bears and the contract can be expected to scale new heights. Supporting the positive view, the relative strength index and the moving average convergence divergence indicators on the daily chart lie in their respective bullish territory, even though it shows a slowdown because of the flat price movement of late.
Nevertheless, the major trend is bullish and the daily trading volume has not dropped even when the price has been largely flat in the past week, which is positive for the commodity. Considering the above factors, one can be bullish and initiate fresh long positions (July series) with stop-loss at ₹5,350. A clear breach of ₹5,500, which will most likely occur, can lift the contract to ₹5,700 in the near term.