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.
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