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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Copper - The Other "Precious" Metal. Setting Up For A Buy. 0 comments
    Oct 29, 2012 1:35 AM

    Sunday Evening 28 October 2012

    The other "precious" metal, copper, has been in our sights for some time, at least since we missed the September breakout. Quite often, after a market breaks out of a trading range, any correction back to
    where the breakout occurred can be an excellent buy opportunity.
    The premise behind it that the trading range was accumulation, and when retested, buys will defend it.

    You can see where price has returned to test previous resistance, which should now act as support, and as price declined to that potential, [it has not been proven, yet], support, the momentum down stopped. Of the previous seven trading days with lower closes, making the volume appear as red bars, the last five had made very little downside progress. In fact, and facts are always good when making technical determinations, it can be said the five days have a clustering of closes.

    The clustering of closes have a specific logic behind them. It shows a balance between the forces of buyers and sellers, waiting for a resolve. The clustering can be a resting spell before sellers resume their downward pressure, or it can be the beginning of a turnaround.

    (click to enlarge)

    An intra day look, using a 20 minute chart, shows congestion where price was making new recent lows on the daily chart, second to last bar above. Could it be a failed probe lower that showed no more seller
    interest of sell stops? Possible.

    When we saw the large rally bar on sharply increased volume, it got our attention as a reason to go long copper at a potentially excellent area of support. When you look at the close of that high volume rally,
    upper end, saying buyers quickly overwhelmed sellers, and then look at the previous day's high volume red bar lower, that selling effort was erased, and that makes a market statement on the seller's ability
    to maintained control at lower prices.

    After that rally bar, price receded and stopped at another little congestion area, around 355, and held above a half-way retracement and above the previous intra day congestion, itself a possible failed probe that could start a rally. That gave us a strong rally on strong volume with a strong close, a higher swing low, where we marked the buy at 355, and then later in the day, another little probe lower, under 354.50, that found no sellers willing to press the market lower.

    Given all the above, it appears to be a good risk/reward trade, based upon the logic and feedback of market activity.

    Long at 355.

    (click to enlarge)

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