The strong rally witnessed in the silver futures contract traded on the Multi Commodity Exchange in the past week from the low of ₹33,102 per kg seem to have paused. The contract recorded a high of ₹35,359 on Monday and has reversed lower from there. It is currently trading at ₹34,600. Important support is at ₹34,200. A dip to test this support is possible in the coming sessions. Whether the contract breaks below this support or reverses higher from there will then decide the contract’s next leg of move.

A fall below ₹34,200 will diminish the chances of any further rally in the contract. Such a fall can drag the contract lower to ₹33,500 and ₹33,000. On the other hand, a reversal from ₹34,200 will keep the short-term outlook bullish. In such a scenario, there is a possibility of seeing a rally to ₹35,000 and ₹35,500.

Traders with a short-term perspective can wait for dips and go long only if the contract reverses higher from the support at ₹34,200. Stop-loss can be kept at ₹33,850 for the target of ₹35,000.

On the global front, the spot silver price ($14.25/ounce) has reversed lower after recording a high of $14.64 on Monday. Support is at $14 which can be tested in the near-term. A subsequent reversal from this support can take the spot price higher to $14.5 once again. Only a strong break and a decisive close below $14 will alter the outlook to bearish for silver.

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

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