Volume: How can it be used in trading?

$20shoes · 12 April 2010

IMHO, I'd be trading HGO on the next bar. Not the best one from a stop perspective but sometimes you have to follow the volatility and jump in when the market is buying.

The test was stepping over the 36-40c range, and taking note of the ensuing participation. It is clear the buyers are moving in. To me it is too early to say whether there is hidden selling. If there were, the market wouldn't have likely gapped over the range and elicited such buying support.

In your other chart, what looked like a promising move has stagnated into a series of failed "up" tests. The volume on the last day fails to push up to new highs. That said, it is not yet breaking down. However, the overall feeling to me is that moves higher elicit some supply which could make for a choppy trade ( perhaps one worth avoiding?)

Trembling Hand · 12 April 2010

HGO. Very strong day but I wouldn't be trading it tomorrow morning no matter what. Not with my money.

:

Nowhere there to put a logical stop IMO.

Missed the boat on that move waiting for a entry/better setup.

tech/a · 12 April 2010

Roland

You still havent grasped the concept of VOLUME support and resitance.
Youve maket your chart with conventional support and resistance pivot levels.

roland · 12 April 2010

tech/a said:
Roland

You still havent grasped the concept of VOLUME support and resitance.
Youve maket your chart with conventional support and resistance pivot levels.

mmmmm, trying a bit harder here:

tech/a · 13 April 2010

Its pretty simple.
Where a bar or Bars show Extreme volume Buyers see this as Support
OR Sellers see it as Resistance.
Depending on wether the Volume is identified as Supply or Buying.
Extend forward the zone (The range of the bar) and there is your ZONE.

Frank D · 13 April 2010

HGO:-

Breakout pattern:- Target 56 cents during 2nd Quarter.

Breakout of April high:- extension into MAY high:- exact target unknown
until April 'closes' & May levels are defined

which means it can continue to trend into higher highs and move beyond 56 cents...

Or it can move in an odrely pattern:- stall @ April's highs @ 50 cents
and then continue towards 56 cents in MAY

tech/a · 13 April 2010

Frank
Thanks for your analysis.
It could well turn out to be correct.
Current Volume analysis is showing (and this morning proving to be correct)
Supply into the market at the level shown on the volume resistance chart.

Boggo · 13 April 2010

This (ALY) is another IADSI highlighted candidate that may have potential.

Last couple of attempts failed but the next bar in each case would have kept you out anyway.

(click to expand)

Frank D · 13 April 2010

ALY:-

Same pattern as first Quarter but no follow through on the Upside then.

Minor breakout of the 3-week highs @ .72 cents

Same pattern would need to see a breakout and monthly close above .86 cents and then
continue higher from the MAY 50% level.

2nd Quarter target 1.39

Support .72 cents

WaveSurfer · 13 April 2010

LKR said:
....Looking at volume bars on dailys can sometimes mirepresent what is actually occuring. Often i will zoom to 5 min charts or less just to check where the demand is kicking in, and at what level supply comes in, and the volume relative....

I missed your post over the weekend. Nice one mate.

Is this what you're sort of getting at?

I was looking at a wide spread high vol up bar on the daily. Zoomed to the 5 minute to find the bulk of that volume kicked in at the lower end of that bar, suggesting it was mostly buying and not hidden selling?

Makes perfect sense if I'm on the right track.

WaveSurfer · 13 April 2010

tech/a said:
Its pretty simple.
Where a bar or Bars show Extreme volume Buyers see this as Support
OR Sellers see it as Resistance.
Depending on wether the Volume is identified as Supply or Buying.
Extend forward the zone (The range of the bar) and there is your ZONE.

Do you use the entire range of the bar (high to low) as the "zone"?

And would this be similar to volume profile in a sense?

Boggo · 13 April 2010

Frank D said:
ALY:-

Same pattern as first Quarter but no follow through on the Upside then.

Minor breakout of the 3-week highs @ .72 cents

Same pattern would need to see a breakout and monthly close above .86 cents and then
continue higher from the MAY 50% level.

2nd Quarter target 1.39

Support .72 cents

Thanks Frank
Some of these tend to tease for a while and then go, just got to be ready to hit them when they move. AZM was an example in mid March and recently IFE was an example of this behaviour, IFE may now starting to show some life.

Cheers

tech/a · 13 April 2010

WaveSurfer said:
I missed your post over the weekend. Nice one mate.

Is this what you're sort of getting at?

I was looking at a wide spread high vol up bar on the daily. Zoomed to the 5 minute to find the bulk of that volume kicked in at the lower end of that bar, suggesting it was mostly buying and not hidden selling?

Makes perfect sense if I'm on the right track.

Yes but your ahead of whats been presented here.
Having said that the more volume IE an entire day or entire week if its still way above average---has more weight than a 5 min bar as far as Volume Support and or resistance goes---well thats what I've Found.

WaveSurfer said:
Do you use the entire range of the bar (high to low) as the "zone"?

And would this be similar to volume profile in a sense?

Yes
And
Yes.

tech/a · 14 April 2010

Trembling Hand said:
NO!!

If the magician shows you his hand then his not a very good magician is he.

Tech I wish I didn't have to have this conversation every time. I do not chase big volume.

I FADE IT

mostly

Sorry T/H just saw this. Apologies.
GRR is behaving nicely.
Frank whats your view further on from your original analysis.

Frank D · 14 April 2010

GRR

completed the 2nd Quarter high @ 73cents.

Whilst above this there is no reason to cover longs, and you would focus
on the next highs in MAY:- unknown at this stage.

Support:- 48 cents.

If Weekly timeframe closes below 73 cents and starts trading below
66 cents, I would personally wait until price retests support.

roland · 14 April 2010

HGG has just pushed through what I have surmised is the supply area.

I am of the understanding that a rise on low volume is a sign of weakness.

My first blue area showing a rise on high volume is much more healthy.

The supply test gave us some pretty good selling volume that brought about some weakness and had us going sideways for a month.

Since we don't have decent volume on the latest push up, does that indicate a roll over is imminent?

tech/a · 14 April 2010

There has been a lot of VOLUME Analysis given here so I thought Id look back and see how it went relative to then---the comments--and now.

Not to beat chests but to make a point that learning how to chart read with volume is a very worth while and can be profitable skill.(There are other ways to read charts) Franks for instance.

HGO
GRR (I now expect a pause (inside day) and have tightened stop.)
NBS
AWE
EWC
All as analysed pretty spot on.

LYC as analysed and still cooking.

Imagine what happens when you combine them with sound Money Management and Trade Management!

Trembling Hand · 14 April 2010

roland said:
HGG

Since we don't have decent volume on the latest push up, does that indicate a roll over is imminent?

Roland, two Parts to moves and volume to my thinking you are looking in the wrong direction.

First part the move. Prices have risen due to people willing to pay higher and higher prices - Good

Second part That move has had less and less volume. That, IMO, is good in this context. Although prices have risen, less are willing to take advantage of that and sell - therefore requiring buyers to pay higher prices - good. (see part 1)

With that said If I was holding I would continue to hold with tight trailing stop BUT because of the highs that turned it around back in Sep - Oct 09 @ $2.50 -60 I wouldn't chase this at these levels.

Tech?

tech/a · 14 April 2010

roland said:
HGG has just pushed through what I have surmised is the supply area.

I am of the understanding that a rise on low volume is a sign of weakness.

My first blue area showing a rise on high volume is much more healthy.

The supply test gave us some pretty good selling volume that brought about some weakness and had us going sideways for a month.

Since we don't have decent volume on the latest push up, does that indicate a roll over is imminent?

Roland

Your chart notations are getting much better.
I'm not going to analyse this chart just yet.
The area you have noted as "Supply Area" is in fact a consolidation Zone

Have a go at working bar by bar through the zone and mark on it what the bars in it are telling you.
In particular
March 17/22/26/29/30
April 7/9/12/13/14

roland · 14 April 2010

tech/a said:
Roland

Your chart notations are getting much better.
I'm not going to analyse this chart just yet.
The area you have noted as "Supply Area" is in fact a consolidation Zone

Have a go at working bar by bar through the zone and mark on it what the bars in it are telling you.
In particular
March 17/22/26/29/30
April 7/9/12/13/14

Here goes:

A. Very high volume, large spread. Breaks $2.40 resistance and pulls back to close on the resistance line. We have a lot of sellers coming in to pull profits from the rise up from the high volume day on the 3/3/2010 seeing the resistance line of $2.40 as a target. The bounce over the $2.40 mark are the small potatoes wanting to get in on the action. These guys are now trapped and will either hold or sell at anything above $2.40 - hence the sideways movement that follows.

B. Lower open with a probe down on diminished volume. Most are locked in above $2.40 with the sellers having already sold.

C. Low open caused by panick sellers and possibly clearing out some stop losses. Confident buyers happy to pick up stock below the resistance.

D. Extreme low volume day, no supply, no demand - everyone just hanging around to see what's going to happen.

E. A probe above the $2.40 has the sellers back that got stuck at point A

F. Higher open, volume up from previous day. Probe above $2.40 clears out more of the weak holders that bought above $2.40. Maybe a 3rd probe above $2.40 have some buying expecting a breakout.

G. Probe up through the $2.40 and down gives no volume. Weak holders gone

H. Rises above the resistance of $2.40 with low volume, sellers gone, first close above $2.40

I. High open has the profit takers coming in. Starting to lock in buyers above the $2.40 mark which caps the selling to above $2.40

J. Low volume up move - no supply. Sellers have dried up. Resistance well breached. Next resistance levl of $2.50 on everyone's mind.

Volume: How can it be used in trading?

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