MCX Gold April future has weakened further as price breached the key support of Rs 44,550. Price is still trading below the lower bound of the downward sloping channel with immediate resistance near Rs 45,120 (5 day EMA), followed by Rs 46,480 (21 Day EMA). The negative crossover of 5 and 21 day EMA also kept a check on the recovery in price trend. On the downside, key support holds near Rs 43,950, followed by Rs 43,600. The strength index RSI is hovering in the oversold zone (26) suggesting weakness in strength. However, this oversold condition warrants some caution in shorts. Going by the above analysis price is expected to move in the band of Rs 43,950-44,980 with sideways to downside bias.
Strategy:
Sell MCX Gold April at Rs 44,600 with a target of Rs 43,950 and a stop loss at Rs 45,000.
MCX Silver May future has breached the lower band of the last four days’ consolidation range of Rs 66,400-69,400. Meanwhile price is trading below the negative crossover of 5 (67,570) and 21 (68,400) day EMA and it has also breached the rising trend line support. On the momentum front, RSI is trading below 50(41) suggesting weakness in the trend. Most of the technical factors suggest weakness in price trend. Hence for the day, price is expected to move towards Rs 64,200, followed by Rs 63,500. Only a close above Rs 68,400 would negate the bearish view.
Strategy:
Sell MCX Silver May at Rs 66,000 with a target of Rs 63,500 and a stop loss at Rs 68,400.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
