Overview:- Last week was the biggest weekly loss after two months. Bears got the charge from the starting of the week and it finished so well with a bearish engulfing candlesticks i.e. bearish marabuzo candlestick. It started to decline from 46900 to 43467 and given closing at 43950 due to fundamental impact.
By looking at the daily technical chart we can see that silver is trading in an downtrend and making successvely lower lows and lower highs daily as well weekly basis. Overall bears are leading and taking the charge and pulling it to south side. The way bears are reacting it seems like bears are approaching the 41000 level. The current picture of silver seems too bearish as we can see that bears are falling down by taking the supply pressure from the downtrend line.
Technical Analysis :- From technical prospective we can see that white metal is trading and moving within the downtrend channel and recetnly it received a supply from the upper line of the channel so we expecting it to downside at 41500 level i.e. lower line of the downternd channel and the way bears are reacting it seems like 41000 is the soft target for bears as 200 SMA line is lying over there. There may be some buying opportunity if we see any reversal.
One more thing we can notice that 43975 level which was a key support level has been breached out on last Friday but let’s wait for this week’s opening. If we get opening below the below 44000 or Monday’s closing below 43700 then there is a confirmation of further bearishness.
A bearish engulfing candlestick in the form of bearish marabuzo candlestick has been posted on the weekly chart of MCX as well as international chart which is generating bearish signal on the chart. Overall pair is trading below all the major and minor EMA lines which is providing outside strenght to the bears.
The Parabolic SAR dots on the upper side of the candles are also pushing us to have bearish outlook on the silver. Bearish crossover on MACD indicator is supporting the bears and recently Signal line along with MACD line has crossed down the zero line which is a recent deveopment on the chart. RSI is also favoring the bears from negative territory i.e. below 50 level . The 42000 is immediate weekly support level followed by 41000 level whereas 45700 level is immediate resistance level followed by 46900.
Fundamental Analysis:- The near term fundamental sentiment seems to have turned weak in bullion prices on greater chances of a U.S.-China trade deal as U.S. and Chinese officials were actively considering lifting some tariffs to complete the partial trade agreement. Barrage of upbeat U.S. economic numbers weaken the expectation of further FOMC rate cut in December meeting which will further dampen the demand of non-yielding assets like gold. However, uncertainties about Brexit and unrest in Middle East will probably offset drastic fall in prices.
What Next:- The primary trend is up and secondary trend is down so the current picture suggest us to sell on high will be profitable strategy for the time being. Overall 41000 level on MCX and on International 16.00 level seems as unfinished target for bulls, however some correction can’t ruled out even every correction should be taken as selling opportunity. A valid closing below the 43000 level will give us the confirmation of further downfall till 41500/41000 level.
Trade idea:- Odds are in favor of bears and intraday to weekly bias remains bearish on the pair as long as 45700 level remains intact. Based on chart and studies above we would suggest our readers that go for short at current level 43900-44000 level target is 42500 and 41000 level with the tight stop loss of 45700 level.