If silver on dips on MCX, buy

Gurumurthy K BL Research Bureau | Updated on December 16, 2014 Published on December 16, 2014


Silver futures traded on the Multi Commodity Exchange (MCX) seem to be losing momentum.

After surging over 5 per cent on a single day on December 9, the uptrend in the contract has paused.

MCX silver futures contractfailed to decisively breach the psychological ₹39,000-a-kg-mark and reversed lower from the high of ₹39,042. It fell to a low of ₹37,152 on Tuesday and is currently trading near ₹37,625.

Immediate resistance is at ₹38,000. Inability to breach this hurdle can drag the contract lower to ₹37,000 or even ₹36,500 and ₹36,285 levels in the coming days.

However, ₹36,500 and ₹36,285 are strong supports, and an immediate break below these levels looks unlikely.

Nevertheless, traders with a short-term perspective can remain on the sidelines and wait for declines. Long positions can be initiated at ₹36,500. Stop-loss can be placed at ₹35,800 for the target of ₹37,500.

On the global front the spot silver ($16.50/ounce) is finding support near $16. As long as the price sustains above $16, a rise to $17 looks likely this week.

The outlook will turn negative only if the price falls below $16 which can then drag the spot silver price lower to $15.5. But such a fall looks less probable at the moment.

A rise in the global silver price to $17, coupled with a weak rupee could limit the downside for the MCX-Silver futures contract and push the price higher in the coming days.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on December 16, 2014
This article is closed for comments.
Please Email the Editor