Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

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

© 2005-2017 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

Catching a Falling Financial Knife