Trade Recommendation: Silver/CAD

The Silver/Canadian Dollar pair (XAG/CAD) launched its uptrend in August 2010 when it took out resistance of 20.00. This triggered the cup and handle reversal pattern on the monthly chart. The breakout attracted so much momentum that the pair quickly became parabolic on the monthly chart. Powered by its supercharged velocity, Silver/CAD went as high as 47.411 in April 2011. In eight months, silver grew by over 137% against the Canadian Dollar.

At this price point, the pair was in extreme overbought territory. Those who followed the trend and bought the breakout saw this as a sign to take profits.

As sellers dominated the market, it plunged to 31.3155 in May 2011. After seeing that the market respected the 61.8% Fibonacci level, bottom pickers entered the buying scene. They ignited a rally which sent Silver/CAD to 43.79802 in August 2011.

Sensing that a lower high in place, market participants dumped positions to protect their capital. The pair generated a series of lower highs and lower lows until it found the bottom at 16.40549 in December 2014. The good news for buyers at this level is that the market has been working hard since to restart another bull run.

Technical analysis show that the Silver/Canadian Dollar pair is creating a symmetrical triangle pattern on the weekly chart. This comes after it generated a bullish higher low setup at 19.58902 in July 2017. In addition, the Bollinger bands are contracting. With a bullish bias, the market may explode to our target after it breaks out from its narrow range.

The strategy is to buy at current market level. As long as bulls defend support of 21, they have all the momentum they need to climb to our target of 26.

The process may take more than three months.

Weekly Chart of Silver/CAD on OANDA

As of this writing, the Silver/Canadian Dollar pair is trading at 21.45562 on OANDA.

Summary of Strategy

Buy: Buy at current market price of 21.45562.

Target: 26

Stop: Close below 21.

 

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, InvestorAcademy.org 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.