Corrective rally possible in MCX silver

Gurumurthy K BL Research Bureau | Updated on January 22, 2018 Published on November 24, 2015


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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Published on November 24, 2015
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