Silver futures traded on the Multi Commodity Exchange have risen sharply by 4 per cent in the past week. The contract has breached its intermediate resistance at ₹35,200/kg and is now trading decisively above ₹36,000.
Although the immediate outlook is bullish, key short-term resistances are coming up for the contract at ₹36,750 and then at ₹37,000. Price action on the charts suggests that the contract is likely to trade above ₹36,000 in the near-term. There is a strong likelihood for a rise to test the hurdles at ₹36,750 and ₹37,000. But, whether the contract will breach ₹37,000 or not will decide the next leg of the move. Short-term traders should therefore exercise caution.
Traders with a high risk appetite can take long positions at current levels. Stop-loss can be kept at ₹35,800 for the target of ₹36,700.
Inability to breach ₹37,000 and a reversal from here will keep the overall downtrend intact. It will increase the downside pressure and push the contract lower to ₹35,000 and even lower thereafter.
On the other hand, a strong break above ₹37,000 and will open doors for a further rally to ₹38,000 and ₹38,500. It will also signal a trend reversal.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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