Silver (XAGUSD) looks to be headed back up to $30.
On MarketMilk™, silver’s trend rating is bullish.
Unlike gold (XAUUSD), which has been in a strong downtrend over the past couple of months, silver has held up much better.
Maybe werewolf traders keep buying and helping to keep the price up? The more expensive silver is, the more expensive it costs to manufacture silver bullets. The fewer silver bullets available, the safer it is for werewolves? 🤔
Let’s move on from my sophisticated lycanthrope analysis and take a look at some charts showing silver’s recent price action.
On the weekly chart, we can see a couple of things:
- The price is technically still in an uptrend with price trading above both its 50 (purple line) and 200 (blue line) SMAs.
- But it’s been stuck trading in a range since last August staying between $22 and $30.
- More recently, that range has tightened between $24 and $28.
On the daily chart, some bullish developments stand out:
- Silver tested dynamic support at its 200 SMA (blue line) twice. On the first occurrence, the price fell below the moving average but managed to climb back above it.
- Price breached the 200 SMA for a second time, but again, was able to climb back above it.
- During this process, we can see that a higher low (HL) has now formed.
- Price also managed to cross above its 50 SMA (purple line), which had been acting as a strong dynamic resistance level in the past.
If we zoom in a little bit on the daily chart, we can see that after the second retest of the 200 SMA, the price was able to break out above its previous high. This is shown by the white dashed line.
Buying that breakout would’ve been an ideal entry but I don’t think it’s too late.
It’s possible that silver has now bottomed so I now look to go long.
Here a couple of trade ideas…
Buy XAG/USD between 25.65-25.85.
You could also wait for the price to close back above its 50 SMA.
Place a stop loss at 24.90, which is underneath the 200 SMA and the low of the candle (04/14/21) prior to the breakout candle.
Take profit at 30.00
Still skeptical? A more conservative entry would be to wait for a breakout above its most recent high (04/18/21) of 26.30, with a stop loss underneath the low of the candle prior to the breakout candle.
It’ll be important to monitor how price behaves around the 50 SMA. If silver can’t manage to move back above it and stay above it, then this recent rally will end up fizzling out and we’ll back to more choppy or sideways price action.
Lastly, if the price falls back below its 200 SMA, then werewolves beware.
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