MCX-silver in danger of a fall

Gurumurthy K BL Research Bureau | Updated on July 29, 2014 Published on July 29, 2014

The silver futures contract traded on the Multi Commodity Exchange (MCX) is struggling to breach the psychological level of ₹45,000/10 gm for more than two weeks. The picture is turning bearish for the contract now.

Although the contract has reversed higher after recording a low of ₹43,728 on Thursday, it has a significant resistance ahead. The 21-day moving average at ₹44,800 will be a key resistance to watch now. If the contract fails to breach this level and reverses lower from here, then it will provide a good opportunity for both the short- and medium-term traders to sell this contract.

Short position can be initiated at ₹44,700 with a stop-loss at ₹45,100 for the target of ₹43,900.

Traders with medium-term perspective can continue to hold their short position. The MCX-silver futures contract is trading in a bear channel. As long as it trades below ₹45,000, there is a danger of a fall to ₹42,500 and even ₹40,000 over the medium-term. Supports for the contract are at ₹43,700 and ₹43,100. A strong break below these supports will result in a decline to the above mentioned levels of ₹42,500 and ₹40,000. So medium-term traders can hold the short position for a wider target of ₹42,500.

The outlook for MCX-silver will turn bullish only if the contract records a strong break closes above ₹45,000. The ensuing targets on such a break will ₹46,500 and ₹48,000.

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Published on July 29, 2014
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