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The silver futures contract traded on the Multi Commodity Exchange (MCX) witnessed a sharp reversal this week. The contract skyrocketed over 6 per cent on Monday. Strong surge in the global spot silver price following the weak US jobs data released on Friday has triggered this reversal. It has also overshadowed the impact of strong rupee on the domestic futures contract.
The MCX silver futures contract is continuing to trend higher and is currently trading at ₹36,854 per kg.
The contract has breached above the 200-day moving average at ₹36,500 which is likely to act as a support now. As long as the contract trades above this level, a rally to ₹37,500 and ₹37,800 is possible in the coming week.
Traders with high risk appetite can go long. Stop-loss can be kept at ₹36,200 for the target of ₹37,700. Intermediate declines to ₹36,500 can be used to accumulate long positions.
The next key support is at ₹36,250. The contract will come under pressure only if it falls below this support level. Such a fall can drag the contract lower to ₹35,500 and ₹35,000 once again.
On the global front, the spot silver price ($15.65/ounce) has surged over 7 per cent since Thursday. Immediate support is at $15.5. The price can rise in the coming days to test the 200-day moving average resistance at $16. Further break above $16 will open doors for a fresh rally to the next targets of $16.5 and $17.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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