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The silver futures contract traded on the Multi Commodity Exchange (MCX) witnessed a sharp reversal in the trend last week.
The contract had turned down sharply after recording a high of ₹37,795 per kg on October 28. It is currently trading at ₹36,110.
The fall was triggered as speculation in the market soured after the outcome of the US Federal Reserve Meeting last week for a possible rate hike from the US in December.
The contract is currently hovering above a key support level of ₹36,000. Whether the contract breaks below this support or reverses higher from there will decide the next leg of move. Traders can wait on the sidelines at the moment to get a clear and confirm trade signal.
A strong break below this support could increase the downside pressure and drag the contract lower to ₹35,500.
On the other hand, if the contract manages to reverse higher from ₹36,000, then a rally to ₹36,500 and then to ₹37,000 is possible. However, the downside pressure will ease only if the contract breaks above ₹37,000 decisively. Such a break can then take the contract higher to ₹38,000 thereafter.
On the global front, the spot silver price ($15.35/ounce) has tumbled over 9 per cent from the high of $16.35 recorded on October 28. A fall to $15.20 and $15.10 looks likely in the coming days. Key resistance is at $15.65.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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