MCX silver price may continue upward trend
Mumbai-India (Feb 14) The strong downtrend in silver prices that commenced last July halted in December. The prices have subsequently reversed sharply higher, thereby easing downside pressure.
The global spot silver price had plummeted 26 per cent from its July peak of $21.14 per ounce to the December low of $15.62.
The price has recovered from that low and it is currently trading at around $17.90/oz — up 14.5 per cent from its December low of $15.62.
On the domestic front, the silver futures contract on the MCX tumbled 22 per cent from its July high of ₹48,932 a kg to a low of ₹38,325 in December last year. In line with global spot prices, the contract has recovered from this low by gaining about 11 per cent from its low. It is currently trading at around ₹42,550/kg.
Outlook: The global spot price ($17.90) is currently hovering below a crucial resistance level. Both the 200-week as well as the 200-day moving average resistances are poised around $18.
Inability to break above $18 immediately may trigger a corrective fall to $17.2 in the short-term.
The level of $17.2 is the key neckline support of the inverted head and shoulder pattern visible on the daily chart.
As such, a further fall below $17.2 looks less probable. A subsequent reversal from $17.2 can take the price higher to $18 once again. A strong break above $18 can test the next resistance at $18.4.
If silver manages to surpass $18.4 decisively, it can target $19 or $19.3 over the medium-term.
On the domestic front, the contract (₹42,550/kg) has a crucial resistance at ₹42,900. Inability to break above this hurdle can keep the contract range-bound between ₹41,500 and ₹43,000 for some time.
An eventual break above ₹42,900 may pave the way for the next target of ₹43,600. A further break above ₹43,600 can take the contract higher to ₹44,300 or ₹44,500.
Traders with a high-risk appetite can go long on dips at ₹42,000. A stop-loss can be placed at ₹41,250 for the target of ₹43,500. Revise the stop-loss higher to ₹42,500 as soon as the contract moves up to ₹42,950.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
Source: BusinessLine
