SILVER SOLUTIONS

Silver is looking vulnerable short-term. We have recently had the usual Kodak bop (the digital film is knocking out silver demand chestnut) and the possible topping of the 8 week /2 month gold cycle AKA Falcor III's Tic Toc cycle (an iconic chart if ever there was one!) show as a wave in this earlier post….

Analysts are starting to pay attention to one support line in particular on the silver chart - the bottom of the current strong up-trend channel. That's the strong orange line in the chart below…

As this article is concerned mainly with near-term action I am going to focus on the region of the chart from 2001 to 2004 - the area bounded by the dark red inverted and inclined Isoscoles triangle just above 'C'. (Point embedded in the silver bar frame)

SILVER TRAILS

This figure started out by identifying and drawing a fan from the low point just above 02 - the turning point for silver. Another fan with lines PARALLEL TO THE FIRST was identified and drawn from the immediately preceding peak. The former fan is shown with solid lines, the latter dashed lines. Parallel lines are colour coded for ease of identification (sorry if you are colour blind).

The dark shadow running downhill from left to right sits on another fan line of the 'dotted' group.

Following the light blue fan from 02 leads to another peak, and another fan, again with lines parallel to existing sets. One of the fan lines from this point is the top of the dark shadow.

Many, many more lines emerge connecting points of inflection and fans, and some of the most significant are shown. I think of these lines as possible futures. Some are more probable than others. In a bull market, the up-sloping ones will offer channels of least resistance more often than not. I am assuming we are in a silver bull market. So are all the people and institutions piling into silver mining shares.

Notice that the stochastics were primarily 'in the red' before 02, but that pastures are getting progressively greener since. (I discounted short shallow excursions across the green/red barrier when highlighting)

Some possible futures are considered below. First, the one on the bears' minds…..

SILVER SHARKS

Thise fishy fins are indeed a nasty piece of work. A repeat of the rising pennant that led to the summer drop in 2002 seems to have formed. This image (or something like it) is giving every silver investor worth his/her salt cause for concern. In my experience (admittedly miniscule) rising pennants have a tendency to break down. But not always, and some TA's consider them bullish! (In fact I have recently posted a couple of UK charts showing just this on CT). However, if silver falls significantly below $5 now, and remains there for more than a few days, then I would have to conclude that support has probably been broken, and recalculate accordingly (after drowning my sorrows with a bottle of cask strength malt whisky of course).

Fortunately there are other fish in the silver sea. Which is where wave analysis comes in.

SILVER SINES

A case could be made for the above - a regular sinusoidal picking up from the 02 dip and carrying forward. In which case around $5.50 is the target for this cycle.

Another sinusoidal interpretation that matches a similar wave analysis for HUI shows the expanding sine curve below ….

In this last analysis the current up-trend should hold until we hit $6 early in 2004. This looks like being in the vicinity of the commencement of the right inverse shoulder as shown on the Isoscoles chart.

CONCLUSION

There are, including the Trigonometrical analysis from a previous article, several paths forward for Ag metal. I still favour the up-trend channel holding and silver breaking out from the silver shark to the upside. The longer it is held up at $5 the happier I will be. A few more days might do it. As Hook would say, everything's crossed!

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