Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Jim Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… - 20th Jan 18
Macro Trend Changes for Gold in 2018 and Beyond - Empire Club of Canada - 20th Jan 18
Top 5 Trader Information Sources for Timely, Successful Investing - 20th Jan 18
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Copper Poised For Breakout While Gold And Silver Falter

Commodities / Copper Feb 17, 2013 - 11:06 AM GMT

By: Michael_Noonan

Commodities

One concept to keep in mind when making a trade selection is that of relative
strength. Given the choice of two or more trade candidates to buy, always go
with the strongest performer. When selling, always sell the weakest one. This
is a simple factor that often gets overlooked. Go with proven strength. Go with
anything that is proven or confirmed. The odds are then in your favor.


Given a choice of potential candidates, in this case metals, many will stick with
sentimental favorites, or choose a weaker of the two or three possibilities on the
basis that the weaker one will “catch up.” Wrong, wrong, wrong. There may be
times when that can and will happen, but on balance, relative strength will keep
its edge, and anytime you can gain an edge in trading, take it.

Copper is on the verge of an upside breakout, which we think started at the end
of January, the 30th to be exact, or it can be setting up for a massive failure.
Anything can happen in the markets, but you base your decisions on what is known
and not on what may or may not happen. Could the potential breakout fail? Yes.
Based on what is known, as of Friday, the odds say No.

To the charts.

Trend and market harmony are the most important considerations. We can all see from
the monthly a series of higher highs and higher lows up until September 2011 when price
entered into a triangle or wedge formation. We pose the question, is this a breakout in
the making, or is it a set-up for failure?

The reason is because we see the last three months are smaller in range to the upside,
relative to the larger downside bar, 5th from the end. It is always important to view as
many sides as possible so as not to get lulled into missing subtle clues. In the end, you go
with the stronger points that make the case.

The current monthly bar is just barely above the supply line, like a rising sunset or a
periscope about to go back down. Monthly charts are not used for timing, and what we
take away from the monthly is the trend: Up.

We admit to a myopic look at copper because it is at a specific juncture that must prove
itself as a breakout in the making. There are other considerations, to be sure, but if the
potential move fails at the starting line, other factors become non-issues in the analysis.
You can read the comments on the chart instead of repeating them here. What we see as
key are the last three weeks, and last week in particular as the possible tipping point for
higher prices to come.

Last week was the highest volume since the end of November, and the week closed lower
than the previous two, but not very convincingly. In fact, we take the counter-argument
that the volume was net buying. Why? On increased effort, [volume], sellers were unable
to extend the range lower. Why? Because buyers were taking everything being offered,
thus preventing price from moving lower. At least, that is our common sense POV. [Point of view].

Markets are consistently full of logic.

We spoke of trend and harmony, at the outset of this analysis on the monthly. There is
consistency in all three time frames supportive of how we read developing market activity
in the present tense. All of the trading days in February are above the supply line because
of the current Mar contract, v expiring front-month contracts on the monthly and weekly.

Again, we narrow the focus, this time to the last five TDs on the chart. 5th bar from the
end was a sell-off with no downside follow-through. What happened to the sellers? The
next 4 TDs are within that Monday range. All four closes form a cluster with each one barely lower than the other.

Despite the increase in volume for the last 3 TDs, [Trading Days], closes are above mid-
range each bar, and the lows stayed above a 50% retracement area for the week. There
are two Buys marked on the chart. One was on the breakout day of 30 January, [See
Copper - Upside Breakout, http://bit.ly/XPGW2u, last chart], and based upon Friday’s
sell-off, while gold and silver were getting hit hard, copper held well, so a second position
was added, with notice given during the day in the Trade Recommendation section. Here
is where the relative strength factor comes in.

We also did an analysis of 60 and 20 minute charts to see the character of each day’s bar
composition. Volume for each day was highest at the low, [smart money buying from
weak hands exiting/selling], and the closes were above mid-range-to-higher on each day.
If copper were to fail and not rally, volume would have been at the highs of each day’s
intra day activity, which was not the case.

It was a “no-brainer” to add another position on a sell-off that demonstrated it was not
really selling off very much, and we read developing market activity as buying, anticipating
a rally soon to follow. We see copper as a “Go With” trade until proven otherwise.

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

© 2005-2018 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