Trade Recommendation: Silver/AUD

The Silver/Australian Dollar pair (XAG/AUD) started to look bearish in August 2011 when it generated a lower high of 42.53274. This was a clear signal to market participants that the uptrend was over. From that point, the pair generated a series of lower highs and lower lows until it found the bottom at 16.95608 in December 2014. In three years, Silver lost 60% of its value against the Australian Dollar.

Fortunately for buyers at this level, XAG/AUD started to show signs of strength. First, it generated a bullish higher low setup at 18.81369 in December 2015. On top of that, the 4-day, 9-day, and 21-day moving averages reversed their direction.

After seeing these developments, more bottom pickers entered the buying scene. The increased buying sparked a rally to just over the resistance of 26.50 in July 2016. While the pair has been correcting since, this could be your chance to bottom fish the market.

Technical analysis show that the Silver/Australian Dollar pair is creating another bullish higher low setup at 19.98514. Bulls appear intent in taking the 23.6% Fibonacci level as they’ve been working hard since July 2017 to stay above this level. In addition, the 4-day, 9-day, and 21-day moving averages are all about to reverse their trend. This could be a signal of a possible move up.

The strategy is to buy the higher low as close to 21 as possible. As long as bulls are above this level, they have all the momentum they need to climb to our target of 26.50.

The process may take more than six months.

Monthly Chart of Silver/Australian Dollar

As of this writing, the Silver/Australian Dollar pair (XAG/AUD) is trading at 21.58816.

Summary of Strategy

Buy: As close to 21 as possible.

Target: 26.50

Stop: 19.98514


Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.