MCX Silver Find Important Support Level Around 56500

The MCX silver chart (shown at the bottom) shows the support at Rs 56500 (blue line). A break below could push silver prices further down.

Fundamentally too, the market is weak. The Greek debt deal ensures that Greece receives the bailout money but the International Swaps and Derivatives Association (ISDA) has stated that Greece has officially defaulted. As such, investors may now be concerned as to the effect it will have on the banking system-the CDS derivatives market since no concrete figures are known. The ISDA stated that the default will trigger only about $3-$4 billion. But considering the highly complex leveraged and interconnected banking system, some analysts caution a wait and watch approach

Also negative for silver markets is China's trade balance for February, which showed a record trade deficit- infact the highest since 2000. China is a major consumer of silver, not only for investment but also for industrial purposes and the string of weak PMI's, industrial production and now the disappointing trade balance could all weigh heavily on silver prices.

As such, a strong break below Rs 56500 could indicate a short term weakness.