This image compares a daily chart of the eurusd with a daily chart of the xagusd.
Generally the two assets have moved together since January, however eurusd has been much move noisy and much easier to trade in small cycles.
What will make the silver usd break out above or below the recent 26 to 29 range ?
While there is no guarantee that the two pairs will continue to move in the same direction, history indicates that if the euro finds support then so will silver.
Thursday August 2, 2012 is a key day when Draghi of the European Central Bank is expected to make news about the ECB putting weight behind to Euro or allowing the markets to determine the faith of the European economy.
In other words investors and bankers are fidgety about Draghi and the ECB using the quantitative easing card this week or this month. Failure to do so will likely send the euro ( eurusd ) down to retest 1.20 and more likely 1.18. That same action will send the xagusd contracts below 26.
If Draghi allows a large cash flow into the free and open markets ( lmao ) then the eurusd will likely rally to somewhere above 1.25. My likely guess is 1.27 and maybe pressure to 1.30.
If that happens then xagusd will follow the direction in a similar rally. I use rally loosely here, since I believe any xagusd move upwards will be a fast and furious spike. Where to for the xagusd ? Half point recovery since January 2012 is about 32. Full recovery hits 35 and a blast into the past could test 45.
xagusd has been consolidating between 26 and 29
All information on this blog is speculative at best. Use at your own risk.
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