The sideways consolidation in the Silver futures contract traded on the Multi Commodity Exchange (MCX) that has been in place for more than three weeks has come to an end. The silver contract surged about 2 per cent on Tuesday breaking above a key resistance level of ₹42,600 per kg. It is currently trading at around ₹43,200.

The near-term view has turned bullish. Strong support is available in the ₹42,750-₹42,600 zone. A sharp fall is unlikely as long as the contract trades above this support zone.

Any intermediate dips seen may find fresh buyers coming into the market. Immediate resistance is at ₹43,572 – the 38.2 per cent Fibonacci retracement level.

Inability to break above ₹43,572 may see an intermediate dip to ₹43,000 or ₹42,750. However, an eventual rise past ₹43,572 looks likely and such a break can take the MCX silver contract higher to ₹43,000 and ₹43,350 there after.

Traders who have taken long positions after the break above ₹42,600 as advised in this column last week can hold it. Retain the stop-loss at ₹42,100 for the target of ₹43,700.

On the global front, the spot silver prices have risen past the key resistance at $18/ounce on Tuesday. It is currently trading at around $18.2.

Key support is in the $18-17.9 zone which can limit the downside in the prices.

An immediate rise to $18.5 or $18.6 is likely. A strong break above $18.6 will increase the possibility of the rally extending to $19 there after.

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

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