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The silver futures contract traded on the Multi Commodity Exchange (MCX) has reversed higher after recording a low of ₹41,011 a kg on Friday. Weak rupee and a recovery in the global spot silver price have aided this reversal in the MCX-silver. The global spot silver has bounced from its low of $18.46 an ounce and is currently trading near $18.70. It has an important resistance at $19 which can restrict the upside. The outlook is currently bearish. A reversal from $19 will leave silver in danger of falling to $18 in the coming days.
On the domestic front, the MCX-silver futures contract seems to have paused within the over all downtrend and is consolidating sideways. Key resistances for the contract are at ₹42,000 and ₹42,500. The contract can rise to test these resistances in the coming week. But an immediate break above ₹42,500 does not look likely.
Short-term traders can use such rallies to initiate fresh short position at ₹42,300. Stop-loss can be kept at ₹42,700 for the target of ₹41,500.
Support for the contract is at ₹41,000. Decline below this level can drag it lower to ₹40,000 in the coming weeks.
On the upside, a strong breach of ₹42,500 would ease the downside pressure on the contract and can take it higher to the next target of ₹43,100.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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