Bowl Basing & Domed Topping
It’s natural that some sort of pattern builds out at cyclical lows and cyclical highs. Here are a handful of numerous examples in a number of markets, but once you start looking they’re everywhere…
The reason I’m focussing on this right now is that it can help to give us a very high confidence level that we’re on the right side of the trade (either long or short in a particular market). If you can confirm that a base or domed top is looking valid by demonstrating multiple touches and successful tests, you can identify the rising or falling support level (as I’ve done for DXY and Gold/Silver in recent posts). A breach of those levels would provide me with my first ‘warning flag’ that something is wrong. Additional confidence comes from the fact that an apparent base lines up with a cyclical high, or domed top lines up with a cyclical top. This is indeed the case for PM’s and the US Dollar. For those reasons, my confidence in PM’s up/Dollar down is pretty high. However – nothing is set in stone, and something that is very, very unlikely, can still occur. Just because the evidence stacks up to favour one particular outcome, an entirely different outcome may occur. That’s why I’m so focussed on reactions of DXY and Gold/Silver within the bowl I’ve identified. The remainder of 2019 is likely to provide all the answers I need.
I’m bowled over!