Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Copper – Upside Breakout. Gold/Silver To Follow?

Commodities / Copper Feb 03, 2013 - 04:11 PM GMT

By: Michael_Noonan

Commodities

The unshiny metal may be outshining its other metal cousins as its price has an upside
breakout. As with any potential move, it remains potential until confirmed by the next
successful retest. This is true for any move in any market. Confirmation is a critical and
overlooked aspect in price activity. While there is no clear correlation between copper,
relative to gold and silver, there is an occasional lag/lead aspect to them, and it may be
that if this upside breakout holds, it can only help gold and silver.


For now, we focus on the breakout to determine the probability of it succeeding. A line
has been drawn connecting swing highs and lows to show higher swing highs and higher
swing lows, the essence of a trending market to the upside. Copper has been trading
sideways since the October 2012 low, but unlike the formations in silver and gold, this
one has a clear triangular pattern to it.

We start with the monthly time frame because it is more controlling than lower times, and
when one sees synergy between the primary time frames, monthly, weekly, and daily, the
odds of a reliable breakout increase. Odds trading, or probabilities is one of the most
important aspects of successful trading. We will do an article on it, soon, but mention it
here because it is so timely for copper.

Sometimes an analysis is easy, just like going through a checklist. You can see the same
pattern formation fits in on the weekly chart. It started from the October 2012 low, while
copper remained in a uptrend, so the triangle starts from one, as well. We are not big on
chart patterns, preferring the singular focus of developing market activity defined only by
price and volume, and time, to a lesser extent. However, some patterns are universal in
recognition, and this is one. Typically, one likes to see a breakout on the 6th point, with
the low being the start at 1. Plain vanilla analysis.

Anytime there is a breakout, singularly or from a pattern, you want to see a strong volume
increase telling you there is a following, an energy with the directional momentum. When
strong volume is lacking, the breakout is more suspect. With copper, we see synergy in all
three time frames, and there is a strong volume surge as price breaks out to the upside.

To demonstrate how reading developing market activity is not mechanical by any measure,
note the highest volume, on the 31st. The volume bar is red, indicating a close lower from
the previous day. A lower close on strong volume usually means sellers are in control. You
can see that volume increased, price was lower, and the close was on the low end of the bar, all signs that sellers appeared to be rejecting the up move and putting buyers on the
defensive.

Where was the downside follow-through? None! What happened?

As you look at that day, it could be many were seeing a sort of “double top” and shorting
against it. We mentioned how important confirmation is to any potential move, and if
traders were “seeing” a potential double top, well, appearances can be deceiving. The
immediate reversal and resumption of the upward direction tells us strong hands were
taking everything weak hands were offering on that day.

We do not know if the “double top” scenario is true, or the sole motivation for the sharp
increase in selling, [offset by buying], but the assessment, re lack of follow-through to the
downside, is accurate. Were it not, price would have been lower, not higher, on Friday.
Simple logic tells us that.

It is also apparent that price had upside momentum as it approached the top of the
pattern. Note the consecutively higher swing lows since November, and the wide range
up bar, on high volume, the day before. There is a reason why we continue to say that
present tense developing market activity, in context, a form of knowledge generated by
the market, is the best and most reliable indicator one can have.

For disclosure, we point out our recommendation to go long prior to the open of the day
session. If our read of developing market activity was on target, at that point in time,
then there should be upside follow-through and an eventual breakout, as can now be seen.

Like we said, sometimes an analysis is as simple as checking off a list and doing what the
list says. A market’s To Do list.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules