There's been a lot of talks recently about gold and silver again after they've spiked a bit. I've personally been waiting for a long time to see such this signifcant breakout of Gold above the $1400 level. But I think a correction here could potentially be due to the weekly RSI currently being above 83. Historically speaking, whenever the weekly RSI gets this high, the market is usually way too overbought and it has always followed by either a correction or consolidation over a few weeks before resuming the uptrend.
Key support for Gold now is the $1400 level which is somewhere between $1370 and $1420. If Gold holds above this level while the weekly RSI recovers in the following weeks, I would expect Gold to explode higher and move towards the $2000 psychological level. On the other hand, Silver has been lagging behind. But Silver has also broken out of a wedge to the upside and could potentiall go back to the $15 level before resuming the uptrend. Having said that, I would not short this market. But would rather try to be alert and perhaps add to my long positions if the right conditions are met. I think shorting this market is very dangerous because the upside potential is not even comparable to the downside potential.
Above you can see a possible price action in the following weeks/months leading to the end of 2020. The green line is at $1370 and I expect there to be a very strong support for Gold if price ever dips to that level. However, it's also possible that a bullish flag forms very slowly and price never goes below $1450. It's also possible that price continues to grind higher and higher from here but this possibility in my opinion is very unlikely due to the weekly RSI showing us how overbought the market is at the moment. But of course, technical indicators like the RSI don't really matter as much if the bulls don't pay attention to it. Now let's have a look at Silver!
As it can be seen in the Silver chart, a much likely price action is a return back to the $15 area and then a sharp bounce and move towards at least $25-$30. Unlike Gold, Silver's weekly RSI is not overbought and Silver has been lagging behind Gold. So it's also possible that Silver tries to catch up with Gold and forgets about retesting the wedge from the other side. If this becomes the case, I expect Gold to stay strong well above $1450. This is of course all just my opinion and I could be totally wrong as I've been in the past! What do you think guys? Let me know below!
Disclaimer: This is not financial advice but rather only my personal opinion. Trading cryptocurrencies is extremely dangerous and can result in the loss of a lot of your capital. Be cautious and do your own research!
