If traders are weary of buying XAU/USD near recent highs, a better setup may be in XAG/USD!
When most people think of a beautiful, shiny metal, usually the first one to come to mind is Gold. The same can be said for when people are trading Gold. There are plenty of sayings about gold in the trading world, such as “Gold is a good inflation hedge” and “Gold and stocks move in opposite directions”. But how many times do you hear people talking about Silver? Not so much. However, silver is still a precious metal and people do trade it. Granted, it might not be in as much demand as gold, however when gold moves higher, the precious metals complex is sure to follow.
Since the recent low was put in on March 16th, silver (XAG/USD) has bounced to near horizontal resistance and the 61.8% from the highs of February 24th highs to the March 16th lows.
Source: Tradingview, FOREX.com
XAU/USD has pulled back to horizontal support in a corrective like fashion and appears to be forming a pennant formation. The target for this pennant is near 19.00, which would be a retest of the February 24th highs! If silver is to bounce from current levels of near 15.07, there is strong resistance near 16.00. Two horizonal resistance levels come across near 16.50 and 17.25 before the 19.00 level. First horizonal support is at 14.70 and again at 14.25. However, if price breaks below, it can fall to 13.00 very quickly.
Source: Tradingview.com, FOREX.com
If traders are looking for the direction of precious metals, they should look at XAU/USD. However, if traders are weary of buying XAU/USD near recent highs of 1747, it may be worth looking at XAG/USD for a better trading setup!
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