Posted By : Kishore B.S
The precious metal Gold which was in the upward trend for quite some days has stalled and has been in the profit booking mode. Now as the charts indicate the commodity has broken down of the upward trending line around the 30030 mark.
Now with the trend line broken the metal is all set for some profit booking and correction to the nearest support level which emerges at the 29880-29680 mark.
The medium term target of 32860 is still intact unless the metal does not break the flag pattern stoploss of the 29000 mark and the dips in the metal can be accumulated for the target of 32860.
For the short term traders the metal can be shorted with strict stoploss of 30130 for targets of 29860-29680.
After the dream run in the year 2010 this precious commodity has been largely sluggish for the last one year moving in the range of 50000-60000 which could be termed as either consolidation or distribution after the rally.
Generally if such range bound momentum continues for the longer duration the outcome could be either large upswing to new heights or down the earlier support levels around the 40000 mark from where the huge rally took off.
The charts above have been depicting the range bound momentum of silver in the downward channel wherein everytime it tries to move up there is resistance and huge sell off resulting in the silver prices to correct significantly.
However for the traders this could be a trading opportunity to be used to short on rallies near the resistance level of 54400 levels and buy near the support level of the trend around the 51600 levels.
If the commodity breaks out of the upper band the target would be 56400 and on the lower band breakdown could see the 50800-49600 mark. Till that the range can be used for profitable trading positions in small quantities.
(Inputs Mr. Hemanth .V, Faculty TA, Stock Market Institute, Bangalore)