Thursday Evening 11 August 2011
Yesterday, we put the odds of positioning in silver at 50-50, a coin
toss with zero edge. [See Silver - Disappointing Action?, click on http://bit.ly/qoNjRj, 5th paragraph]. As we watched developing price
activity, Thursday morning, it appeared a slight edge was apparent.
A look at the daily chart will show what we saw before going to an
intra day chart.
Price was now in the 6th day of a small trading range, and the
lowest close was 37.83. That day was also a failed probe lower.
These probes are used by smart money to determine if there is
more weakness and/or more sell stops just under the market. This
one found neither, and that is a piece of market information as part
of an ongoing "puzzle" to be solved.
If the increased volume associated with the attempt to go lower was
not producing more downside on now the 6th day, then selling effort
is more suspect, and the developing market activity may be tipping
in a more positive direction. With that in mind, what we saw on the
intra day chart prompted a move to the long side with a limited risk.
Mention was made of the failed probe on the daily chart, three
trading days ago. There was another potential failed probe early
in the trading day. When the day's low occurred, it was on less
volume, and that says there was less selling pressure; it did not
uncover any new selling activity, and there were few sell stops.
Each little piece of information was beginning to tell a more
cohesive story. Another clincher was the fact that it was also
making a higher low, and a higher low is a good reason to expect
a potential turnaround in market activity.
Here was developing market activity taking on a more definitive
statement, and it looked like price was ready to work higher. That
prompted a long position at 38.40 with a stop just under the day's
low. The trade was either going to work right away or stop out with a reasonable risk.
What is needed now is confirmation by a move to the upside.