DISCLAIMER: I am not a financial advisor. All contents on this blog are solely my own personal views and for Commodities/CFDs Trading education/entertainment purposes only. Commodities/CFDs Trading are very risky. Losses can exceed deposits. Enter with discretion.
I always consider Silver as the more undervalued asset when compared with Gold. Of course it does, both are God’s money since the ancient times. These two always sit next to each other as Gold always the first and Silver in second just like the Olympic medals awarded to the winners.
We all know that 2020 was a year to remember in the financial markets across the globe where Silver also had reached bottom on March 2020 against the USD for as low as $11.64 per ounce.
Fundamentally, rumors has it that the very people or could be a large group of financial institution who made recent crazy pumps on the GameStop (NYSE: GME) stock and meme cryptocurrency DOGEcoin backed by famous Elon Musk’s tweets on social media. These Reddit WallStreet Bet group seems to target Silver pump as well! Who knows, we’ll keep an eye for that.
PS: Robinhood already blocked the DOGEcoin and I heard that the GME tradings were halted as well. Such crazy things happening this week alone! :-)
Going to the technicals, since then, XAGUSD made its comeback all the way up with an astounding bullish run started from April till August 2020 before it corrected on September 2020. Literally, it had a 5 month bullish streak upon looking on the monthly chart. Double monthly tops occurred from April and September after an overbought RSI and MACD suggested for a price correction.
Price then went into a 3 month consolidation period from September to November 2020. By December 2020, Silver broke out again to as high as $27.40.
I had to look out for the hourly chart, this time we can see a series of higher highs and lows forming a bullish triangle formation. Both the hourly 100 and 200 MAs offer strong supports. The price of XAGUSD is still trading inside the upper Bollinger Bands level validating a further uptrend. If it manages to break outside this bullish triangle, price can target near term resistance of $27 but I am bearish bias short term. I am also speculating massive sell orders above this waiting for the buyers. There will be a re-test on the $27 as resistance to be more precise in case this scenario occurs.
My trading plan is a short position for the Silver against the US dollar. The said $27 re-test resistance level will be my entry. Stop loss set on the nearest ATR range on $28 level. I will take profit found on the hourly 100 and 200 MAs acting as heavy supports, precisely at $25.50.
This trading plan will give me a Risk:Reward ratio of approximately 1.5. A quick trade if I were to say.
Thanks a lot for reading my analysis on the Silver and I wish you a great trading day ahead!
