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The downtrend in the silver futures contract traded on the Multi Commodity Exchange (MCX) remains intact.
The contract has breached the level of ₹42,930 a kg that was anticipated in this column last week.
Currently it is hovering near the key support at ₹42,500. A reversal from here can take the contract higher to ₹43,500 in the coming days.
However, this would just be a corrective rally and the broader trend will continue to remain down.
Traders can stay out of the market at the moment.
However, they can use the corrective rally if seen to initiate fresh short position at ₹43,400. Stop-loss can be placed at ₹44,100 for the target of ₹42,300.
On the other hand, if the MCX-silver futures contract declines below ₹43,500 immediately it can extend its fall to ₹42,115 which is the 61.8 per cent Fibonacci retracement support level.
The medium-term outlook is very bearish.
The contract has been trading in a bear channel since November last year. The recent fall from the high of ₹46,400 recorded in July has happened from the channel resistance level.
This has increased the danger for the contract to revisit ₹40,000 or even lower levels over the medium-term time frame.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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