Technical Analysis XAGEUR : 2019-02-25

[IFC Markets]

The demand for investment silver declined last year

Sales of silver investment coins and bars in the world decreased in 2018 by 4% compared with 2017. Will the XAGEUR fall?

Such a movement indicates the cheapening of silver in euros. The GFMS agency published a report on the world demand for investment coins made of precious metals for 2018. The report presents both the annual reduction in sales of physical, investment silver, and the quarterly. In the 4th quarter of 2018, sales decreased by 3% compared with the 3rd quarter. Besides all this, the total demand for precious metals usually decreases when the US dollar strengthens. It is possible in case of the Fed rate hike or victory of the US in trade wars with China and the EU. In turn, the main risk for the euro is the launch of the new money emission in the Eurozone to implement the TLTRO program. As expected, the ECB will disclose its plans on this issue at its next meeting on March 7, 2019.

On the daily timeframe, XAGEUR: D1 has breached down the support line of the uptrend. A number of technical analysis indicators formed sell signals. The price decrease is possible in case of a decrease in world demand.

• The Parabolic Indicator gives a bullish signal. It can be used as an additional support level, which should be breached down before opening a sell position
• The Bollinger bands have narrowed, which indicates low volatility. The upper band is titled down
• The RSI indicator is above 50. It has formed a negative divergence.
• The MACD indicator gives a bearish signal.

The bearish momentum may develop in case XAGEUR falls below its last fractal low, the Parabolic signal and the 1st level of Fibonacci at 13.7. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the high since June 2018, the upper Bollinger band at 14.3. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (14.3) without reaching the order (13.7), we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis


Position Sell
Sell stop Below 13.7
Stop loss Above 14.3