Silver Dome Meets the Silver Bowl
Cliff Droke
Silver futures have been in the doldrums for four weeks now and traders have been asking "when will this correction finally end?" The silver chart suggests the correction should be over soon week as the latest 12-week cycle in silver is bottoming this week.
The latest chart for May silver futures explains the headline for this commentary: "Silver dome meets the silver bowl." You can see the interaction between a 3-month parabolic dome, which is almost exhausted, and a parabolic bowl still in the formative stage. There is still enough momentum in this dome to provide perhaps one more quick downside move in the coming week to test the recent support zone between $4.55-$4.60 before the dome "expires." Once the outside rim of the dome is penetrated
we should witness a nice little rally get underway in the silver market.
Even more telling is the nature of the still-forming parabolic bowl in the daily chart. As you can see, there is still plenty of room left before the bowl reaches maturity, and as prices have just recently passed the mid-point, or "vertex," of this bowl there will be more upside impetus as prices move further along toward the upward-curving rim of the bowl.
The next bullish phase in silver will be signaled when the dome in the above chart is penetrated. In the event silver prices slip beneath $4.55 this week there is still enough room to support a decline down to around $4.50 before the bowl becomes violated. Of course, this is a worst-case scenario since the $4.55-$4.60 area is the first line of defense as the latest 12-week cycle bottoms.
March 10, 2003
Clif Droke is the editor of the weekly Bear Market Report, a combined forecast and analysis of U.S. stocks and indices and international precious metals stocks, and is the author of numerous books on finance and investing, including most recently "Gold Stock Trader's Almanac 2003." Visit his web site for free samples of his analysis at www.clifdroke.com
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