Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Silver - The Precious Metals Bellweather? Possibly

Commodities / Gold and Silver 2013 Jul 08, 2013 - 06:56 AM GMT

By: Michael_Noonan

Commodities

A shout-out to I M Vronsky and his crew, [Gold-Eagle], for reaching its 475 Millionth view since it began on 1 January 1997. Congrats!

This is a singular look at silver because of its current position on the charts that may be giving our first hint of potential bottoming activity. It is a "fashionable sport" for many to call a bottom, or a top, even though "they" are consistently wrong. No one can tell what has not yet happened, aka the future.


Charts speak the loudest, [admittedly, not always the clearest, but for a reason], and they never lie. Why do charts never lie? They just are. A chart is the true record of all buy and sell decisions executed, coming from the most informed to the least informed. Most of the problems lie with those who form an opinion, andhow they choose to impose it onto what any given chart "says."

We prefer to follow the message of a chart, not lead or predict what it may, or may not do. There is a high degree of logic in charts, and we try to draw conclusions from them, just not always successfully. As a road map, reading charts is superior to fundamentals, opinions, and mechanical technical tools which all use past tense information, impose it on the present tense, and expect it will divine the future tense.

It appears that silver is at a potential bottoming area, and very close attention to how price develops from today forward may provide key information from which one can profit. To start, everything in a chart is potential until it is confirmed. The adjective bottoming, as in ongoing, is used because a bottom of any market is a process. It does not happen in just one day, and it can sometimes take several months to reverse a down trend. Always keep that in mind, and let the market prove itself to prevent needless risk exposure for those insisting to be first.

It can be seen from the Quarterly chart that the current correction has run deep, but price is nowhere near taking out the 2008 swing low, from which the bull move up began. Few ever look at a Qtrly chart, but the few who do are in the "smart money" category. Smart money does not care about daily charts,[ as most everyone else pays such close attention to them.], because they are only interested in major moves, and it is these longer term charts that show them best.

Longer term charts are used for context, to put a market into a perspective, ultimately for making a trade determination. Clearly, the trend in silver, and gold, is down. What we can learn from the monthly is the fact that price has reached an important support area.

The current price has entered the identified support, and we explain that support is an area, not just a specific line or price. Consequently, what becomes important, as the lower time frame charts provide greater detail, is to watch how price responds/reacts to the target area. What we are looking for are clues in a change of behavior, for it is a change in behavior that leads to a change in a trend.

The weekly more clearly shows the area of support at which silver has now reached. The daily reveals much more.

A support line was drawn only on the weekly to show the importance of the $26 level, but $26 shows up on each of the higher time frames, and from that, we know when $26 is retested, it should offer resistance, certainly the first time around. We also noted how the Ease of Downward Movement, [EDM], sliced right through it, once broken.

Price is always important, but when coupled with volume, it can be the most telling of all information, and it is always right up to date, for everyone to see as it develops. Whenever you see high volume moves, it is your key that smart money, [SM], is active in the market. SM moves in such volume, sometimes it just sticks out. For the most part, SM tries to hide its intent, but it is almost impossible to do at important market turns.

The public and speculators do not create high volume; they react to it. Everyone knows it is axiomatic that SM sells tops and buys bottoms. The public is always on the other side.

Here is where the logic comes in. Note the first high volume bar in June. [We were off one bar to the left when we drew it in]. Price is breaking under a small congestion area. The next highest volume bar, just to the left of the oval, is sharply higher than the first. It is when price broke under 21 and 20 on the same day. So many weak longs and stops were washed out. [Guess who was on the other side?]

Within the oval, there are four trading days to discuss. Red volume bars means the close on that day was lower than the day before. Compare the first red price and volume bar with the one 4 days earlier, when price broke under 21 and 20. The volume of the first bar within the oval is almost equal to the down volume bar from 4 days ago, but compare the size of the trading range. The first price bar in the oval is much smaller. Why?

Volume increased sharply, and the bar was smaller. What the market is letting us know is that buyers entered the market and were more than matching the effort of sellers. Were that not true, the price range would have extended lower.

The 2nd bar in the oval is much less subtle. Volume was greater than the day before, but look at the tiny price range. Buyers stopped sellers cold! It was like opening a basket at the 18.50+ area, and the buyers said, "We will take as much as you have to offer." For all of that increased effort, [volume], sellers were totally spent. Buyers were totally in control at a price level and trend that had been dominated by sellers. There is more!

Next day, the highest contract volume and highest volume in months produced a price bar that rallied and closed on the high, producing an Outside Key Reversal Day, [OKR]. This could be the bottom. It needs to be confirmed. If it is not the bottom, the market is telling us we are very close to seeing one. Either way, what we saw two weeks ago was an important change in market behavior.

If we were ego-driven and wanted to impress, we could say this is the bottom. It may be, but we still will wait for confirmation.

We are seeing a price change from weak hands into strong hands, [in the paper market]. The 4th bar in the oval was another up day. Volume was the smallest of the 4, and note how the price range narrowed, and the location of the close was under mid-range the bar. Buying had been expended is what that bar was saying, and we see price corrected right after. Most of the buying has been from short-covering.

The last bar on the chart shows a down day, wide range and high volume. While price did decline, it did not make a new low for the increased effort. We now get to watch more developing market activity that will confirm, or not, the logical conclusions extracted from the market itself. Now news. No opinions. No mechanical tools. Just price and volume that have combined to tell the story, straight from the market's mouth.

Silver stackers, these lower prices are a gift you should keep on taking. Stay tuned.


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