Short XAGUSD is inline with our views
Silver plays a number of roles, unlike Gold it does have industrial uses and so part of its price is about industrial production, its price still moves more like a precious metal than anything else and precious metals have two fundamental drivers. The Us dollar and Risk sentiment, when things look good people move there money into stocks and out of precious metals and as Silver is priced in US dollars if the dollar goes higher Silver typically goes lower.
You can see from my recent post on stocks that I think they have turned higher already and I am still a believer in the USD. Our fundamental belief at Bagehotsway is that markets trend and that trend is more likely to continue than change, as a result we are always looking to buy dips and sell rallys in trending markets. Silver would seem to be a good opportunity.
.Silver has been in a downtrend since 2011 a bottom will eventually be found but we dont know when. We will just keep selling bounces until we are wrong. The most recent leg of the downtrend began in July 2016 when a bounce to $21 fizzled out, we estimate that the trend lower that started at that point should reach $13 so it still has some way to run.
The recent bounce, which was very aggressive appears to have met resistance in our selling box at the red horizontal trend line that has been both support and resistance of late. A small triangle pattern has developed, just congestion really, but that is not a reliable turning signal.
Another important part of our trading strategy is sentiment, we do not like trading with the crowd. Every advert from the brokers now say around 80% of traders loose money, so if most people think its going higher then it is probably going lower, the general market view is that the dollar is going lower and silver higher, thats adds confidence to our view.
Please remember this is just our view, we dont sell signals or advice we just say what we are thinking.
Price has moved lower as expected after a period of sideways indecision.
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