By Ravindra Rao
MCX Gold August futures witnessed a healthy correction during the week gone by and formed a bearish ‘Marubozu’ candlestick pattern, which signals towards a bearish reversal in price trend. The price is now trading below the 250-day EMA (Rs. 47360), which could be the key resistance for the August futures. Similarly, on the downside, key support holds around Rs. 46220 (61.8 per cent Fibonacci retracement level of the uptrend). So, a breakdown below that could further extend the downside and push the price towards Rs. 45300.
Meanwhile, RSI on the daily charts is hovering near 30(31), suggesting weakness in the strength. But the oversold nature of RSI could restrict the deep slide in prices and might bring in some relief. Hence this week will be important to watch. If the price witnesses some stability, we could expect some recovery in the gold price.
Strategy:
Buy MCX Gold August futures at Rs. 46600 with a target of Rs. 47350 and a stop loss at Rs. 46200.
MCX Silver July futures had attempted to move above the resistance level of Rs. 69200 (5-day EMA) but lost the momentum and settled near the day’s low on Friday. The nearby support for July futures exists around Rs. 66900 (61.8 per cent Fibonacci level). A decline further would extend the downside towards its next support at Rs. 65500. Immediate resistance is seen around Rs. 69200, followed by Rs. 71300. Short-term momentum has turned negative as RSI broke down to a new low which suggests an accelerating negative momentum. So for the day, the price might continue to move in the range of Rs. 67000-69200 with a sideways bias. Only a close above Rs. 69200 would bring fresh hopes in price recovery above Rs. 71000.
Strategy:
The trading range for MCX Silver July futures lies between Rs. 67000-69200.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)