The silver futures contract traded on the Multi Commodity Exchange (MCX) zoomed three per cent to close at ₹35,806/kg last week. Further, on Monday it gained 3.7 per cent accompanied by good volume, breaking through a key support as well as down trend-line.

Medium and short-term trend are up from the contract. The recent acceleration in the contract has pushed the daily relative strength index to overbought levels. Moreover, the contract has breached the upper boundary of the Bollinger Bands which also signals overbought.

It currently tests a key resistance at ₹37,000 and poised at crucial trend-deciding level. Hence, traders should tread with caution in the coming week. A downward reversal from this resistance can pull the contract down to ₹36,500 or ₹36,000. The medium-term uptrend will remain in place as long as the contract trades above ₹35,000. An emphatic break-out of ₹37,000 can take the contract upwards to ₹37,500 and then to ₹38,000 levels in the short term.

On the global front, the spot silver price surged 2.3 per cent breaching a key resistance as well as 200-day moving average around $15 per ounce. It now faces next resistance at $15.6. Strong rally above this level can take it northwards to $16 or $16.2 in the short-term. But, a strong fall below $15 can bring back selling pressure and pull the metal price down to $14.6 or $14.4.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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