Trade Example – Silver

Filed under: Learn Forex Trading |

The pair for silver has made an interesting and powerful move up in the past few days. I actually missed the trading opportunity because I had a platform software issue on my VPS (these things happen), but for those of you that saw it, there was a very significant breakout, which provided a good trading opportunity.


Figure 1.

If you look at Figure 1, you will see the daily chart for the XAU/USD pair, which is the pair for silver. What you can see is that after a strong move down, price started to consolidate and move sideways. A trading range began to form with a clear upper boundary. To add to this, the 8-day exponential moving average crossed above the 21-day exponential moving average, signalling that a bull move might be imminent. However, our trigger was the upper edge of that boundary, which was acting as a strong area of resistance.


On 20th August, the upper edge of the trading range was penetrated. But this still was not our trigger. It was the close above resistance on the 20th that was the significant moment, and it was not only a slight close above resistance – but it was a powerful and decisive move. This would have been a good time to go long, with a stop loss placed just a few pips below the low of the bullish breakaway candle, and a target of two times our risk. As you can see, this move has continued powerfully upwards, and our target would have been met for a very nice 2% rise on our bank. We have to take these opportunities as they come along, and make the most of the edge that we have. That’s all that I have for you today – but I’ll be back tomorrow with another forex price action commentary. Until then – happy trading!

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