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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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  • Silver - Constructive Chart Formation Continues. Waiting For Upside Mark-Up. 0 comments
    Aug 2, 2011 12:12 AM

    Monday Evening 1 August 2011

     Silver continues to hold in a small trading range while gold keeps
    making new highs.  Since our last article when we noted that there
    was a poor close, price did not make any further upside headway,
    and it has since been correcting. [See Silver - Buying A Breakout?,
    click on http://bit.ly/qmsrSZ, second chart.]

     The charts remain similar, and the trading range that was
    developing over a week ago has held above 38, and as we noted
    then, the trading range remains above the previous range, and that
    is a bullish sign.  Most trendlines are drawn horizontally, but ongoing support/resistance areas are fluid, do the nonhorizontal line below
    better captures the "trendline" more reflective of the ongoing market.

     The numbers, 2, 2 and 3 are the number of trading days price
    corrected from the last swing high.  First degree corrections usually ast one to three trading days, and this last one was three trading
    days.  The difference between a first degree and second degree
    correction are the number of days.  A second degree correction
    can last five to eight trading days and indicates a weaker market,
    but still within an up trend.

     The low after the 3rd day shown is holding well above the last swing
    highs in May, and that, too, is an indication of buying strength in a
    market that is not considered as strong as gold, by contrast.  In what
    is a good market, first degree corrections should hold, and we were
    a buyer of silver at 39.53, for that reason.  See next chart.

     SIU D 1 Aug 11

     There are two slanting lines under the price activity, labeled 1 and 2
    It is to show the difference in how the next swing low has shortened
    relative to the previous swing low[s].  In this instance, sellers are
    not driving price as low as they were able in the last swing move down.

     We also drew a horizontal line from the 28 July low which held two
    tests next day on the 29th, Friday.  On Monday, there was a probe
    lower that rallied smartly and closed high end.  That potential failed
    probe did not find any more willing sellers or sell stops, which is why
    price did not continue lower.  The fact that the close was high end
    tells us that buyers were in control, overwhelming the effort of sellers,
    at that time.  It was for that reason we went long at 39.53 during that
    30 minute bar activity.  The high end close led to a rally that broke
    through the down-sloping trendline, but only temporarily, as the day
    developed.

     By the close, it looks like there was a retest of the failed probe, and
    it so far has held going into the evening session.  No one has anyway
    of knowing how price will develop going into the future, but whenever
    one can take a position ins such a dynamically moving market and
    limit risk exposure, in this case, 60 cents, the risk is more than
    reasonable relative to the potential, as much as $4, or 7 to1.

    SIU 30m 1 Aug 11

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