The strong downtrend that had begun in late October in the silver futures contract traded on the Multi Commodity Exchange (MCX) seems to be losing momentum. The contract recorded a low of ₹33,152 a kg on Monday and has reversed higher. It is currently trading at ₹33,720. The broader downtrend remains intact. But a corrective rally to ₹34,500 and ₹35,000 is possible in the coming days while the contract manages to sustain above ₹33,000. Immediate resistance is at ₹34,000. A strong break above this hurdle will open doors for the corrective rally.

Short-term traders with high risk appetite can go long on a strong break above ₹34,000. Stop-loss can be kept at ₹33,850 for the target of ₹34,500.

There is a strong resistance at ₹35,000 and this level could cap the upside for the expected corrective rally in the contract. Subsequent reversal from this level will keep the overall downtrend intact. In such a scenario, the danger will increase for the contract to break and fall below ₹33,000 towards the next targets of ₹32,000 and ₹31,800.

Medium-term investors who have taken short position last week can accumulate short positions on rallies at ₹34,500 and ₹35,000 as mentioned in this column last week. Retain the stop-loss at ₹36,000 for the same target level of ₹32,300.

On the global front the spot silver price ($14.15 per ounce) hovers above a crucial support level of $14. There is a possibility to see a sideways move between $14 and $14.5 for some time. The metal will come under fresh pressure only if it declines below the support of $14. Such a break can drag it lower to $13 thereafter.

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