Trading the gold/silver ratio
With the Federal Reserve projecting a shallower hiking cycle, it is possible that we will see a theme of USD liquidation over the coming week.
We should see gold and silver continue to move higher in tandem with the USD liquidation theme.
In silver, we see a symmetrical triangle on the daily charts which suggests further upside once prices have broken out.
In gold, a falling wedge on the daily chart after an uptrend suggests further upside once prices have broken out.
We can trade the higher gold and silver prices through the gold/silver ratio, which is on a downtrend since March 2016...
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Source: Saxo Bank
Entry: sell XAUXAG market (~67.3).
Stop: we base our stop on 2 x ATR*, i.e. 67.3 +2 (1.23) = 69.76
(*ATR = average true range, a measure of the degree of price volatility.)
Target: when the stochastics next exhibit a bullish crossover.
— Edited by Michael McKenna
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