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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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  • Rough Rice - Who Knew? Now You Do. 0 comments
    Jan 30, 2011 3:06 AM

    Saturday  29 January 2011

     Very few people know about Rice, Rough Rice to be specific.  It
    is traded on the CME, and it is a grain that is getting ready for a
    breakout.  Fortunately, from a technical analysis perspective, the
    names may change but the charts all read the same.  This is out
    first analysis on it, and maybe your first look at it.  To get an
    overview, we start with the monthly.

     A pivot line was drawn at $16, a price over which Rice must
    rally to prove its next move higher.  What can be seen from the
    monthly, upon a closer look, it that the current rally, while still
    with a lower swing high, is already stronger than its predecessor. 
    We can see the large volume bar that rallied to just under the
    privot line, but price has not done the effort any justice, since.

     

     RCH M 29 Jan 11

     The current rally is compared to the previous one in both time
    and price.  Beyond the stated, what next becomes of interest is
    the developing trading range, simmering just under resistance. 
    The real resistance is the last high at 15.81 from 9 November
    2010.  Yes, it is under the pivot, by all true support/resistance
    lines are not straight.  Therefore, a rally above 15.80, on strong
    volume could start the true breakout. If not, we still know of the
    16 area.

      RCH W 29 Jan 11

     The daily shows a four month trading range, moving further and
    further along the RHS, [Right Hand Side], of the chart, headed
    toward an eventual break out from the range, either up or down. 
    We say it will be up, but that is not saying much, given the delicate
    balance in the world food supply.  Friday's close, last bar, is high
    end.  Just a comment about that close, Rice rallied from the 14.64 
    daily low to 15.10 in the final five minutes before settling at 15.015. 
    It is a thinner market, but someone is supporting it.

     There are two price decline with dark bars under them and
    corresponding dark lines showing the volume behavior during
    each decline.  Volume needs to be read in context with market
    activity.  It is not something that is mechanical, like RSI, or MACD. 
    In the first instance, increased volume on a decline is usually a
    negative.  as volume increased, look what happened to the daily
    bars.  They got smaller, until the bottom.
     

     The smaller ranges tells us that buyers are entering and
    supporting prices at the lower level, and that "unseen" support
    is what kept the ranges from extending lower.  We say "unseen"
    because this cannot be known fully, at the time, and is an easier
    read, after the fact, although the smaller ranges do provide a
    clue as red flag bars.

     In the second price decline, which is also a retest of the late
    December low, the smaller volume tells us that there is no
    selling pressure on the price decline, so it is "technical" in
    nature.  As would be expected, a rally did follow, and that
    brings us to the present tense.
     
     What we see over the last few weeks of trade are many closes
    on the upper end of the range.  That tells us buyers are in
    control as price works higher.  There is no clear trend, so the
    developing activity will be a little harder to read, but the net
    effect of how Rice is developing over all three time frames lets
    us know that this is a market that will soon be on the move.

    RCH D 29 Jan 11

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