The silver futures contract traded on the Multi Commodity Exchange (MCX) has been under pressure over the last week. The contract touched a high of ₹47,694 per kg on September 6 and tumbled over 5 per cent from there to a low of ₹45,080 on Monday. However, the contract has bounced back from the low and is currently trading near ₹45,700. Though the contract has reversed upwards, significant resistance between ₹46,250 and ₹46,500 may restrict the upside in the short-term. A test of these resistances is possible, but an immediate break of these levels looks less likely.
The contract can fall to test the next support at ₹44,700. A strong break below this support can drag the silver futures contract lower to ₹44,500 and even ₹44,000 thereafter.
Traders with a short-term perspective can wait for a rise and go short on a reversal from the ₹46,250-₹46,500 resistance zone. Stop-loss can be placed at ₹47,150 for the target of ₹44,500.
The downside pressure will ease only if the contract breaks and closes decisively above ₹46,500. Such a break will increase the possibility of the contract rising to ₹47,500 and ₹48,000 thereafter.
On the global front, the spot silver price ($19/ounce) failed to break above $20 decisively. It touched a high of $20.12 in the past week and has reversed from there. With resistance around $19.5, a fall to $18.5 looks likely in the coming days.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.