Fundamental Summary: Crude has been trading in a nice down trend and making new lows every day. Currently it is trading at 3418. Winter season is considered good for fuel sector and crude has been falling during 1st half of winter session and hovering near $53.23. Falling crude price during winter and holidays season is irrational. We may see good demand during 2nd half of winter season as winter will be on its peak and would trigger demand. Transportation activates are likely to increase during holidays season that also relates to crude oil consumption and will result in declining inventory and would be a supporting factor in coming days. We will see inventories will start declining during coming months and OPEC may also cap crude oil production which would trigger sharp recoveries in this counter.
Technically crude on MCX is forming a bullish butter fly pattern and hints a possible recovery from point D that completes near 127.2% extension of move XA. 1st accumulation can be done near 3390-3410 zones. We are expecting crude to respect 3390 zones as good support and if it happens then we will see good recovery in this counter but if bulls fail to protect 3390 then it would increase odds for a retest to 3100-3000 zones which is the potential target for current bearish swing on broader picture. Areas of 50$ are technical and psychological support on NYMEX and presence of Fibonacci price clusters near 51-50$ zones hints strong support and potential reversal zone. All in all down side risk is limited now and traders can start accumulation as per their holding capacity. This is totally investment based explanation if traders are willing to print huge money with low risk and small time frame then they should stay away from accumulation.
On a clear note 3570 as become big resistance now and 3390-3380 are immediate support zones, failure of these levels is less likely but in case of failure it would trigger possibilities for 3100-2900 but these declines can be used for accumulation instead of selling.
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