Gold and Silver have been in a downtrend since March. According to price action technical analysis, gold and silver prices are currently breaking out of the resistance level. There are a few possible scenarios that could play out for gold and silver prices. Fun fact: silver has the highest positive correlation with gold compared to other metals.
[Image: Gold price chart (weekly)]
[Image: Silver price chart (weekly)]
- Gold and silver will break out from these key resistance levels, and surge to $1800 (gold) and $20 (silver) levels before losing momentum and dropping to the current support level again before rallying to the next resistance level. It’s very common for an asset's price to retest previous resistance (current support) after a breakout and before surging to a new high (next resistance).
- Gold and silver will consolidate around key support and resistance level for a while until the lower support level weaken which cause the price to drop lower (to the lower level of support). The lower support levels for gold and silver are $1683.38 and $14.366 respectively. This scenario will likely happen if the support level is tested too many times as the more a support level is tested, the weaker it becomes.
- Gold and silver will fail to break out, drop and consolidate around key support and resistance level for a while, and keep retesting until they eventually break out successfully. The prices will surge higher, and pull back to previous resistance (current support) before rallying higher to the next resistance ($1880.88 for gold and $20.843 for silver).
Note that price action technical analysis disregards certain market conditions such as fundamentals and macroeconomic factors.