Silver Cells
7 December 2003
The triangular repeat in the silver chart was first identified in the article I called Triggeronometry - actually after the title of a 'Dennis the Menace' story from the Scottish 'Sunday Post. I am revisiting the silver weekly chart now because it seems we are at the transition between the present triangular cell and the next one.
The following charts were traced from weekly silver line charts published by Bigcharts.com and Stockcharts.com on 30th November 2003. The analysis was completed the following week. Both are traced from logarithmic price weekly line charts of silver in dollars. There are subtle differences between the two as can be seen by the following superposition.
Obviously the charts are similar but there are also differences. The question is - are these differences significant? And if so, which chart should I use for further analysis? In the following two charts I have dropped each chart in turn into a pattern of bisected triangular cells.
1) There is a transient spike here that rises prominently above the Bigcharts central triangle - absent from the Stockcharts plot.
2) Bigcharts weekly silver does not go as far back in time as Stockcharts.
Since the Bigcharts silver chart shows a transient that is simply not present in the Stockcharts plot, I decided to use it in subsequent analyses, despite the fact that the spike looks like an anomaly as is clearly shown in the next chart based on completely regular triangles
The apparently contrarian decision to include the spike was taken on the following basis.
1) Never ignore data just because it doesn't fit a hypothesis.
2) Nothing obscures truth more than belief.
For instance, for some time I was predicting Gold to top (TIC) at $395 around the end of September (it did) but for the HUI to rise much further - to 275 and then to 380/400 (the HUI is now at 250+). At the time these two predictions seemed mutually exclusive. As it happens, the gold cycle peaked on cue, dropped a little, and since then gold has made new highs. It seems the falling dollar has raised the level of this gold wave minimum - the TOC - which makes me optimistic about the gold price going forward - we should really be commencing the 8 week cycle up-wave now. Incidentally, this view runs counter to the prevailing notion of a healthy correction being due now.
Using the Bigcharts chart, the following structure crystallised out….
1) I drew 7 vectors - shown by coloured arrows fanning from the base of the
well-known 'Buffet' spike.
2) Vectors were further developed into sets of lines of equal inclination
and pitch.
3) The green set (vector 7) indicates that the spike may indeed
be significant.
4) Pitchforks 4 & 5 create an intersection with the top line of set 7
5) The top-right intersection of 4, 5, 6 and 7 coincides with an exact
repetition of the previous Buffet spike move - a correlation shown here by
the faint broad arrows in the background.
Even with the above level of symmetry resolved, I was not completely happy. The main bugbear for me was the offset perpendicular of the central triangle. Then I thought - why not look again at the combined plot of the two charts, to see if we can refine the silver crystal structure further?
Now THAT looks more like it to me! At this point I want to remind the reader that in ALL charts in this editorial
1) All triangles in any chart have EXACTLY the same included angles
2) Parallel lines are EXACTLY parallel
3) Equally spaced lines are EXACTLY equally spaced
Think about that before delving into this final chart, which is a result of combining structural information derived from the previous two charts. The Bigcharts plot only was used here - the degree of resolution required precluded me from using a fudge of the 2. Plus the Stockcharts one had already done its job of identifying the correct alignment of the large-scale structure.
Conclusions
It is possible to find S/R (Support/Resistance) lines in random Brownian motion! In order to test S/R lines for significance, confirmation should be sought. This can be
1) Are we at the perimeter of the chart?
2) Does the line intersect several strong turning points?
3) Is the S/R line part of an equally-spaced parallel set?
Fans can show S/R when drawn from previous peaks. They can also be projected into the future as illustrated in this article and elsewhere, but this process can be highly speculative. It is my belief that these projections carry more weight if -
4) Fan lines are reinforced by generating equally-spaced line sets.
From the above analyses I would calculate that silver is going to have a shot at $9.50 before the middle of next year - the apex of the projected fan. It may not reach this target - look to the right of the above chart and you will see a confluence of R/S lines around $5.50, $6.10 and $ 6.90. There is not much, however, between $6.90 and nearly $10, though, apart from the $8.50 resistance line identified in Equilateral Triangles by the callout 'An easier target'.
Post Script
On the strong parallel line-sets that seem to mysteriously produce equally-spaced support/resistance boundaries....
I think of these as musical octaves. After all, the audio frequency spectrum too is calibrated on a log scale.
As for any intermediate parallel lines - these are simply harmonics and overtones.
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