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  1. Commodity trade setup Dec 19: Silver breaks crucial support of ₹89,000; Crude oil protects 21 EMA

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Commodity trade setup Dec 19: Silver breaks crucial support of ₹89,000; Crude oil protects 21 EMA

Upstox

4 min read | Updated on December 19, 2024, 17:26 IST

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SUMMARY

Silver prices remained under pressure for the third day in a row and slipped below the crucial support and swing low of ₹89,200. If it surrenders the crucial support on closing basis, then it may extend weakness up to ₹85,000.

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Commodity trade setup 19 Dec: Silver breaks crucial support of ₹89,000, Crude oil protects 21 EMA

Market recap (as of 5:15 pm)

Gold 5 Feb Futures: ₹76,210/ 10 gram (▼ 0.58%) Silver 5 March Futures: ₹88,504/ 1 kg (▼ 2.08%) Crude Oil 17 Jan Futures: ₹5,970/ 1 BBL (▼ 0.32%)
Gold: The yellow metal traded lower on Thursday, with spot gold trading 0.77% lower at $2,632 an ounce amid a sharp rise in the U.S. Dollar Index. This came after the U.S. Federal Reserve said that it would slow the pace of its monetary easing cycle next year, leading to a rise in the U.S. dollar and Treasury yields. The dollar index rose to its highest level in two years, making gold more expensive for holders of other currencies.
Silver: Silver prices are also trading lower by 2.45% at $29.88 per ounce in the spot market. Precious metal investors are cautious as the markets look forward to key economic data, including U.S. Q3 GDP numbers, initial jobless claims data and Bank of England’s interest rate decisions.
Crude Oil: Oil prices are trading marginally lower today. Brent Futures traded around $73.33, while WTI Crude traded around $69.98; both are down 0.08% and 0.84%, respectively. Crude oil prices declined after the U.S. Federal Reserve signalled it would slow the pace of interest rate cuts in 2025. As per experts, the move by the U.S. central bank could slow economic growth and reduce fuel demand.

Technical structure

Gold: From the technical standpoint, gold prices are currently trading below both the short-term daily exponential moving averages (EMA) like 21 and 50. This indicates that the short-term trend of the yellow metal remains weak. However, it is trading within the range of ₹79,000 and ₹73,000 for the past three months and unless it breaks this range on a closing basis, the trend may remains sideways.

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Silver: Silver extended its losing streak for the third consecutive day and slipped below the crucial support zone of ₹89,200 on the daily chart. The Futures contract of 5 March also slipped below the low of the inside candle formed on 18 December, signalling weakness.

For the upcoming sessions, traders can monitor the swing low of ₹89,200. If silver surrenders this level on a closing basis, then it may extend the weakness up to ₹85,000. On the flip side, if it protects this zone then the trend may remain sideways with resistance around ₹96,200.

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Crude Oil: Crude prices broadly consolidated within previous day’s range and faced resistance around the ₹6,100 zone. As shown on the chart below, currently the crude is forming a flag and pole pattern on the daily chart of its 17 January’s Futures contract, with immediate support around ₹5,800 zone. A close below this zone will invalidate and change the structure of the pattern.

A pole and flag pattern is a continuation pattern seen in technical analysis. The sharp price movement (pole) is followed by a consolidation phase (flag), often leading to a breakout in the direction of the initial trend. However, it is important to note that the crude prices are consolidating within the range of ₹6,100 and ₹5,600. Unless it breaks this range on a closing basis, the trend may remain sideways.

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The open interest data for the 15 January expiry has significant call and put placement at 6100 strike, indicating range-bound movement for the crude oil around this level. However, traders should closely monitor the price action. A break above or the key levels of ₹6,100 and ₹5,800 may provide directional clues.

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Disclaimer:

Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop-losses. The information is only for the client's consumption, and such material should not be redistributed. We do not recommend any particular stock, securities, or strategies for trading. The securities quoted are exemplary and are not recommendatory. The stock names mentioned in this article are purely to show how to do analysis. Take your own decision before investing.

About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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