Silver - Constructive Chart Formation Continues. Waiting For Upside Mark-Up.

Aug. 02, 2011 12:12 AM ET
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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 managed money in the cash bond market for a $5 billion pension fund using Peter Steidlmeyer’s Market Profile. Proficient in Gann, Elliott Wave, Market Profile, etc, Mr Noonan no longer uses any of those technical procedures. Instead, his primary focus is on developing market activity, relying solely on the information generated by the market itself, such as the interaction between price and volume, and how they relate to important price levels in the market structure. He incorporates proven market principles, such as knowledge of the trend, supply and demand, along with disciplined rules for to find developing high probability trade opportunities. He can be reached by e-mail at his website:

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, 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

 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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