A few weeks ago, when Gold and Silver were breaking lower, posting the lowest level in over a month, a lot of people were saying that the trend is over.
From a technical point of view, this was actually true, as Gold and Silver broke through their daily trend line support for this year.
However, we made it also very clear that both metals had more potential, despite the fact that both metals closed one full week below their trendline. Why? Because Gold is money.
Indeed, Gold and Silver rebound strongly over the past week, breaking above key resistance areas, which proves that both metals are strong and have more potential ahead.
Gold May Test 1278
First of all, Gold is now trading above its entire key levels, including the three moving averages on the daily chart, including the 50, 100 and 200 DAY MA.
In addition, Gold is now trading above its broken uptrend line on the daily chart, which shows that the recent break through that support was just another fake breakdown.
With such rebound, Gold now has bigger chance to resume its yearly uptrend, which may lead to a test of 1300 later this year.
However, there are some key levels that we need to keep an eye on over the coming days and weeks.
First of all, the technical indicators are overbought, which eases the possibility for a notable rally from the current levels. A short-term retracement would be needed before the upside rally occurs.
At the same time, the first immediate resistance stands at 1278, which is the daily downtrend line as shown on the chart. A break of which would be needed to make sure that Gold is about to take off above this year’s high.
On the downside view, any downside retracement is likely to be limited above the previous bottom around $1210. But before that, keep an eye on the entire moving averages, including the 50 DAY MA which stands at 1255, 200 DAY MA at 1241 and finally 100 DAY MA which stands at 1237.
Silver’s Moment Of Truth Approaching
Silver managed to rebound above some key resistance levels last week, including the $17 barrier, leading to another push higher all the way to 17.30’s.
Despite the fact that Silver added more than 1$ of gains over the past few days, yet such rally is still not enough to be very bullish on Silver.
As we noted in our previous reports, Silver needs to rebound above its Moving Averages with a clear daily close above that area, which stands between 17.40’s and 17.60’s where the 50, 100 and 200 MA’s are trading right now.
In addition, another level should be watched very carefully around 17.90, which represents the broken uptrend line.
Silver needs to break above these levels to prove that its strong enough to regain above this year’s high.
From a technical point of view, another downside retracement is highly possible over the coming days, especially that the technical indicators are heavily overbought on most time frames.
The bullish outlook remains unchanged for the time being as long as Silver continues to trade above this month’s low around $16 and or this year’s low which stands at $15.60.