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The silver futures contract traded on the MCX which was consolidating sideways for more than a week resumed its fall on Tuesday. The sharp fall in the global silver price has completely over shadowed the impact of weak rupee on the contract and has dragged it lower along with it.
The global silver ($17.18/ounce) spot price, which was hovering above its intermediate support at $17.5 for some time, has declined below this level on Tuesday. The bearish outlook remains intact for a fall to $16.6. This could keep the MCX-silver also under pressure in the coming week.
Resistance for the MCX-silver futures contract is at ₹39,500 a kg. While below this level, the probability of a fall to ₹37,650 is high. Traders with a short-term perspective can go short now with a stop-loss at ₹39,550 for the target of ₹37,700.
Traders need to be cautious at this juncture since the downtrend since July in the MCX-silver contract could be nearing a bottom. A crucial channel support is available at ₹37,500. Technically, a reversal from this support level could have the potential to take the contract back to ₹40,000 levels in the medium-term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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