The silver futures contract traded on the Multi Commodity Exchange (MCX) is stuck in a narrow range in the past week after a sharp fall below ₹44,000/kg. The immediate outlook is not clear. A breakout on either side of ₹43,350-44,300 will determine the next leg of move for the contract.

However, the trend since July is down which leaves the probability high for the MCX-silver to fall further in the coming days. Key resistances for the contract are at ₹44,000 and ₹44,400 – the 21-day moving average.

Initial signs of a positive sentiment will come only on a strong close above the 21-day moving average . In such a scenario, the contract can rise to ₹44,850.

While the contract remains below the above mentioned resistance levels, it can fall to ₹42,930 – the 50 per cent Fibonacci retracement level in the coming days.

Traders who have taken short position last week can continue to hold it with a revised stop-loss at ₹44,700 for the target of ₹42,950.

Intermediate rallies to ₹44,000 and ₹44,300 can be considered for accumulating more short positions. Traders who do not hold any position now can consider taking fresh short position at ₹44,000 with a stop-loss at ₹44,700 for the target of ₹42,950.

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

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