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The silver futures contract is stuck in a sideways range between ₹38,000 and ₹39,000 per kg over the last one week. This sideways consolidation could be a base formation after the sharp fall since July.
Having said this, the contract could be gearing up for a corrective rally in the coming days.
On the global front, the spot silver ($17.5/ounce) is holding well above the $17 mark.
The outlook is bullish for the price to rise to $18 in the coming days. A strong breach of this level can even take silver higher to $18.5 thereafter.
A rally in the global price could help the MCX-silver futures contract breach its hurdle at ₹39,000.
The Indian rupeealso appears weak. Even after the strong inflation data releases on Monday and Tuesday, the rupee has failed to strengthen beyond 61 and has closed weaker on Tuesday at 61.42. Weak rupee could also help domestic prices rise.
Having said this, there is a strong possibility of the MCX-silver futures breaking ₹39,000 to rally to the next targets of ₹39,650 and ₹40,000 in the coming days.
Supports for the contract are at ₹38,300 and ₹38,000.
Traders with a short-term perspective can go long with a stop-loss at ₹37,800 for the target of ₹39,800.
Intermediate declines to ₹38,300 can be considered for accumulating more long positions.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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