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The silver futures contract traded on the Multi Commodity Exchange has been stuck in a sideways range of ₹41,300-₹42,500 a kg over the past week. The contract has reversed higher after recording a low of ₹41,294 on Monday. The weak rupee has, however, limited the fall and has aided the reversal this week. Though the overall outlook is bearish, the immediate short-term picture is not very clear for the contract. It can continue to consolidate sideways for some time.
Series of resistances seen at ₹42,500, ₹42,715 – the 21-week moving average level – and then at ₹43,000 could restrict any rally in the contract. Having said this, a break above ₹43,000 looks less probable now. As such, traders with a short-term perspective can initiate fresh short positions on rallies at ₹42,700. Stop-loss can be kept at ₹43,200 for the target of ₹41,400.
Support for the contract is at ₹41,300. A strong break and a decisive close below this level will increase the downside pressure. It can then drag the contract lower to ₹40,000.
The outlook for the MCX-silver futures contract will turn bullish only if it breaches ₹43,000 decisively. Such a break will open doors for the next targets of ₹44,000 and ₹45,000.
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