One For Silver Bulls: PAAS Breaks Out

12/12/19 04:30:54 PM

by Fawad Razaqzada

The chart of Pan American Silver Corporation (PAAS) was painting a rosy picture as the stock cleared a key resistance level after the formation of a bullish continuation pattern.

Security: PAAS
Position: N/A

As its name suggests, Pan American Silver Corporation is a mining company based in Canada with operations in Latin America. The company has mines and other projects in several countries including Mexico, Peru, Bolivia and Argentina. The stock of PAAS tends to track the underlying price of silver closely as you can see from the chart below. Recently, it has even outperformed the precious metal.

Figure 1. PAAS vs. Silver.

Graphic provided by: TradingView.

Silver has been held back in recent months because of a strong dollar and concerns over the Chinese economy. But the greenback has started December on the backfoot as fresh ISM manufacturing Purchasing Managers' Index (PMI) suggested US factory growth is slowing down. Meanwhile, President Trump once again called for lower interest rates in the US, although whether the Fed and its Chairman Jay Powell listens is another matter.

But there was good news from China, where the official PMI returned to growth while the unofficial PMI experienced the fastest rate of expansion for three years. Resilience in the world's second-largest economy revives hopes of a base in its recent downturn. Further improvement in China's economy, if seen, should be good news for commodities across the board — and by extension, the stock of Pan American Silver Corporation.

Technically, PAAS is looking bullish. It spent much of October putting the finishing touches of what was a Cup and Handle bullish continuation formation. The bulls will be happy to see that the stock has started December with a bang after breaking out above key resistance in the 19.00/19.05 range, taking it above the neckline of the abovementioned formation.

The bullish breakout suggests the stock may continue higher in the days ahead. The first big target for the bulls is approaching around $21.59, which was the high hit in 2016. Whether or not the stock will get there remains to be seen. But with silver showing signs of a potential reversal in its downtrend this year, this stock could go significantly higher in the long-term if the underlying metal prices were to rally.

Fawad Razaqzada

Fawad Razaqzada is an experienced analyst and economist having been involved in the financial markets since 2010 working for leading global FX and CFD brokerages. Having graduated with a degree in economics and leveraging years of financial market experience, Fawad provides retail and professional traders worldwide with succinct fundamental & technical analysis. In addition, he also offers premium trade signals to subscribers, and trading education to help shorten the learning curves of developing traders. He has also been trading on his personal account for many years. Follow Fawad on twitter @Trader_F_R or visit his website at TradingCandles.com.

Title:	Financial Market Analyst
Company:	TradingCandles.com
	London,
Website:	tradingcandles.com
E-mail address:	fawad.razaqzada@hotmail.co.uk
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One For Silver Bulls: PAAS Breaks Out

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