Source: PaxForex Premium Analytics Portal, Fundamental Insight
While risk appetite increased globally, partially fueled by hopes that a vaccine will bring an end to the Covid-19 pandemic, the second wave continues to intensify. The US leads the surge in daily infections, but recession risks in Germany represent a more imminent threat. Economic data continues to deteriorate across developed markets, but emerging markets delivered a series of upside surprises. The best-case scenario is an uneven and sluggish recovery in 2021, adding to upside potential in risk-averse assets.
With rising risks of a correction in equity markets, after a massive rally fueled by optimism rather than factual developments, gold and silver enjoy a bullish outlook moving forward. Record global debt levels, which are expected to increase further in 2021, add to the upside potential in the XAG/USD, a less crowded trade than its big brother XAU/USD. Traders should account for more volatile trading and potentially more short-term downside pressure that will form the base for an expected advance.
The forecast for XAG/USD turned bullish following a healthy correction in this precious metal. It moved below its Ichimoku Kinko Hyo Cloud before stabilizing. While the Tenkan-sen continues to move lower, the Kijun-sen started to flatline. The CCI also extends its recovery, and an exit from extreme oversold territory can spark the next advance in silver. Will bulls amass enough power to set the XAG/USD back on its long-term uptrend? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for Silver remain inside the or breakout above the 22.900 to 23.450 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 23.200
- Take Profit Zone: 28.100 – 28.900
- Stop Loss Level: 22.550
Should price action for Silver breakdown below 22.900 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 22.550
- Take Profit Zone: 21.300 – 21.650
- Stop Loss Level: 22.900
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