Technical Analysis &XAGMXN : 2018-08-15

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IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

In this review, we suggest considering the personal composite instrument (PCI) &XAGMXN. It reflects the price dynamics of silver against the Mexican peso. Will XAGMXN prices rise?

This happens when silver prices rise, and the Mexican peso weakens. In general, precious metals prices have fallen since the beginning of the current year amid the Fed rate hike and strengthening of the US dollar. Thus, gold prices decreased by 8% to the low for a year and a half, and silver prices – by 12% to the low for 13 months. In recent days, the interest in precious metals as safe haven assets has increased amid the collapse in exchange rates of currencies of developing countries and, in particular, of the Turkish lira. Since the beginning of 2018, the lira has fallen by 67% against the US dollar. The negative trend affected the majority of currencies of developing countries except the Mexican peso, which, since the beginning of the year, on the contrary, has strengthened by 3.5%. Recently, its prices are moving against the market. For example, since the beginning of the year, the Brazilian real collapsed by 17.6%, and the Argentine peso – by 60%, the Chilean peso – by 8%. On August 24, data on GDP and the current account balance for the 2nd quarter of 2018, which may affect the exchange rate of the Mexican peso, will come out in Mexico. If it starts to weaken together with other currencies, then this can contribute to the increase in the considered PCI.

XAGMXN

On the daily timeframe, XAGMXN: D1 left the downtrend. The PCI is trying to correct up from the support level and the 13-month low. The price increase may occur in case of an increase in demand for precious metals and correction of the Mexican peso.

  • The Parabolic indicator gives a bullish signal.
  • The Bollinger bands have widened, which indicates high volatility. The lower band is titled upward.
  • The RSI indicator is below 50. It has formed a positive divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case XAGMXN exceeds its last high at 295. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the 13-month low and the Parabolic signal at 281. 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 (281) without reaching the order (295), we recommend cancelling the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position Buy
Buy stop Above 295
Stop loss Below 281

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