Last week, the silver futures contract traded on the Multi Commodity Exchange (MCX) fell 2 per cent to close at ₹46,321 per kg. The contract will now test a key support as well as the 21-day moving average at around ₹46,000.
On Tuesday, the contract was down ₹121 or 0.26 per cent at ₹46,352. Since recording a new high for the year at ₹48,932 on July 4, the contract has been on a near-term downtrend.
The daily relative strength index has entered the neutral region from the bullish zone. Further, the daily price rate of change indicator is featuring in negative territory, implying selling interest. The near-term stance is bearish for the contract.
An emphatic fall below the current support level of ₹46,000 will strengthen the downtrend and drag the contract down to ₹45,000 and then to ₹44,500 in the coming weeks. Traders with a short-term perspective should tread with caution and initiate fresh short positions on a conclusive fall below ₹46,000 with a stop-loss at ₹46,400.
The key support below ₹44,500 is at ₹43,500.
Conversely, a strong rally above the immediate resistance at ₹46,900-47,000 will reinforce the bullish momentum and take the contract higher to ₹48,000 and then to ₹48,500.
On the global front, the spot silver price ($19.7/ounce) has been range-bound between $19.2 and $20.5 since early July. The silver price tests the lower boundary with a negative bias.
A decisive fall below $19.2 can pull the price down to $18.8 and then to $18.4. Significant resistance beyond $20.5 is at $21.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.