Recognising Volume - opportunity or trap?

[motorway]

Re: Recognising Volume-----opportunity or trap.

Just realised that the chart is a 180 min chart.
I dont have that at home so you'll have to wait for tommorow.
Sorry.

Seems most agree that stops should now be tight.There is evidence presented but not conclusive---Yet.

The struggle between buyers and sellers though is being won by the buyers as price is still rising overall as some have pointed out Motorway says that supply is being absorbed by demand.

Till tommorow.

And there is a lot of gasoline in the tank at the moment

ie what was very dull has exploded into action

So one should probably give weight to that fact

Sponsorship has become active ,, for some reason,,

However ... without more context I would be on the sidelines
With more context it could be different
( I would like to Know , How many shares issued , held by the top twenty , does the company regularly issue new capital, Does the Stock have a history etc .... All this helps define the technical position )

With such Volume all the bars together could be good buying
Or it could be a get out of jail card for those long locked in..

Some of both etc

Absorption is, in the setup of those bars the key.

This phase is incompleted... The bars breakup esp the volume action. Which You need to see as a continuous unfolding

After Successful Absortption

Are Successful Breakouts

And breakouts in that context are valid buys and not traps
So the next few bars will reveal
Which side supply ,( which IS very evident ) or demand ends with the following which overcomes ...

Change of ownership is occurring
technical postion is changing..

Motorway on the limited information is waiting
Supply could still be stronger than the Demand..

Enough such cases fall back to dullness
Though the wake up call can be valuable later on..

motorway

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

Tied up in meetings but here is a bit of history.

I agree with M/W its difficult without history.So----

 

[glenn_r]

Re: Recognising Volume-----opportunity or trap.

G'day Tech

Yeah I've been using VSA as a final filter and/or alert in my short term trading and it is proving very valuable when used in confluence with other analysis, i.e. candlesticks, EW, S & R etc.

As I trade equity CFD's short term and equities/warrants longer term, my short term universe is based around the ASX200, therefore I'm biased to trade the bigger cap's and more particularly so when shorting, each to their own of course.

I prefer to use VSA as a component of the trade setup, its amazing how most times a trade plays out as the analysis suggests, but on its own it is not the be all and end all.

Anyway thank your mother for the rabbits and good trading, also sorry if this has gone off on a tangent.

 

[cuttlefish]

Re: Recognising Volume-----opportunity or trap.

motorway makes a good point that knowing how much issued capital there is and how tightly held is important if looking at volume.

For example 5 million shares traded in a stock that has 2 billion shares on issue with only 30% held by the top 20 is far less significant and event than 2 million shares in a company that only has 200 million shares on issue with top 20 holding 60%.

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

Cuttlefish.
You can add whatever filters you wish to your analysis.

Here we are reading Volume and range only as thats all we have,other than history shown above.

This is how the next few bars played out.
Howthen fdo you think the last bar played out.
Very strong volume with a definate thrust into new territory.

 

[nizar]

Re: Recognising Volume-----opportunity or trap.

motorway makes a good point that knowing how much issued capital there is and how tightly held is important if looking at volume.

For example 5 million shares traded in a stock that has 2 billion shares on issue with only 30% held by the top 20 is far less significant and event than 2 million shares in a company that only has 200 million shares on issue with top 20 holding 60%.

In that case you should take a look at MIN.

Not enough liquidity in it for VSA but the top 5 shareholders hold about 80% of the stock. (Yes the top 5).

Doesnt take much to make it run.

Disc: I have a few.

 

[motorway]

Re: Recognising Volume-----opportunity or trap.

Tied up in meetings but here is a bit of history.

I agree with M/W its difficult without history.So----

And suddenly what a difference that context makes..
What looked like a single splash from one event
Now is seen to be connected and have History and context..

As regards the extraneous matters
With enough context They are not absolutely necessary

You should always look at the bigger picture .
And from different perspectives
Then the tape will tell ALL

or as much of all as can be told

motorway

 

[Porper]

Re: Recognising Volume-----opportunity or trap.

Cuttlefish.
You can add whatever filters you wish to your analysis.

Here we are reading Volume and range only as thats all we have,other than history shown above.

This is how the next few bars played out.
Howthen fdo you think the last bar played out.
Very strong volume with a definate thrust into new territory.

Not really my strong point but I would say the last bar is a bit of a last hoorar for now.Volume exceptionally high with a close off the highs.(Like most of the last few bars).

The volume bubble around 0.055 is significant and would be a great time to get back in. If history repeats itself and we drift down on low volume to that area, could take off again.

I wouldn't jump in now, but that's me thinking I'd missed the boat.

 

[cuttlefish]

Re: Recognising Volume-----opportunity or trap.

The extended context of the second chart makes a big difference. Knowing that recently there were much higher volumes means the high volume of the final bar on the original shorter chart isn't actually that high compared to historical volumes and volume is still actually lower overall compared to the last fairly recent big flurry of activity, which changes the interpretation.

So it'd probably be more fun if you gave us all the relevant facts

But working with just the information as hand I can honestly say I don't have a clue so shouldn't rely on my technical analysis skills :

Won't stop me having a go though.

Third chart looks like bullish breakout of a short term pennant/flag type of continuation. Last two bars of the pennant rejected lows on falling volume which is good, but failed to open above close, and the breakout volume is reaching historical highs - so possibly getting close to exhaustion. I think its likely to open higher but after that you'd have to be looking at it intraday - would expect either a very good continuation on moderate/lower volume or a blowoff top on very high volume, closing below open.

 

[MS+Tradesim]

Re: Recognising Volume-----opportunity or trap.

Have to agree with cuttlefish. The extended history does change the interpretation. As already stated the volume is not excessively high in relation to the previous upwards attempt. Won't comment further at this stage as interpretation can be manipulated through the amount of data shown. IOW, what else don't we know which would be pertinent before entering a trade? On the info available I would look towards a moderated continuation upwards.

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

All excellent comments and great to see so many having a go.

The things to look for is the effort required for result.
Are the pushes forward being met with strength from buyers or flooding from sellers.
Tommorow morning I'll post the Tradeguider chart with alerts which I havent done here so far.
Even without the commentary I think you'll agree that the alerts make the chart much clearer. While as it is it is to a degree subjective some are very close to the mark.Analysis from another scource for me at least helps me gel my opinion of what I think I see.Often the Brain sees things before the algorithms particularly in the lower timeframes (I'm finding).Makes the decision when all catch up with each other (Brain and software) a snap!.

This is actually a chart of a smallcap which I began today to trade.

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

Here is what the software says and confirms the views of some who made comment here.
Do you think it would be a good short? If so what would you need to see to go short,other than a reversal of price.

 

[Porper]

Re: Recognising Volume-----opportunity or trap.

Here is what the software says and confirms the views of some who made comment here.
Do you think it would be a good short? If so what would you need to see to go short,other than a reversal of price.

I wouldn't short it, but a gap up on very little volume and a close off the highs would be further evidence to support the bearish picture.(Demand waning) Any close infact off the highs could be seen as negative.

Also a high volume very narrow ranging bar would be negative.?

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

So huge volume large range.
Next day gap up and IMMEDIATE supply.

Now What do you think happened?
What would you now be looking for to re enter this stock as I have?

 

[Porper]

Re: Recognising Volume-----opportunity or trap.

So huge volume large range.
Next day gap up and IMMEDIATE supply.

Now What do you think happened?
What would you now be looking for to re enter this stock as I have?

I would say that the upward path continues.

Strength is shown on down bars and the last bar is strong.

There has been a test, which showed there was no supply (low volume bar), with a close well off the lows.The way is open for another leg higher.

 

[nizar]

Re: Recognising Volume-----opportunity or trap.

Tech/a,

Does VSA work equally as well on weekly bars as opposed to intraday bars?

And I hear there needs to be sufficient liquidity for VSA to be applied?

What exactly is sufficient? i mean like generally, as a rule of thumb.

And would I be correct to think that using VSA would improve my win% on my weekly trend following method?

ie. by only taking the signals in which VSA supports a breakout.

 

[Synergy]

Re: Recognising Volume-----opportunity or trap.

Why is the high bar on high volume here so bearish? I'm trying to work my way through this and am not really getting it. High volume on a higher close is not a good thing? Is the fact that it's opening lower of more concern than it not closing on its high?

When looking at only this bar and the bar before it, is it still a bearish signal or is it only bearish if looking at the entire picture?

 

[cuttlefish]

Re: Recognising Volume-----opportunity or trap.

Now What do you think happened?
What would you now be looking for to re enter this stock as I have?

Be looking for next bar to open lower but show high volume rejection of intraday lows possibly around the 5.6c mark (66% fib retrace from the 4.8->7.3 rise). That'd provide good evidence of a support level and reasonably safe entry to the established uptrend.

 

[tech/a]

Re: Recognising Volume-----opportunity or trap.

I would say that the upward path continues.

Strength is shown on down bars and the last bar is strong.

There has been a test, which showed there was no supply (low volume bar), with a close well off the lows.The way is open for another leg higher.

Porper

I'll go through the entry and the trade in progress tomorrow as the chart STILL isn't to the entry point YET.But your on the right track---but then you knew that anyway!
The trade may or may not pan out.

Tech/a,

Does VSA work equally as well on weekly bars as opposed to intra day bars?

And I hear there needs to be sufficient liquidity for VSA to be applied?

What exactly is sufficient? i mean like generally, as a rule of thumb.

And would I be correct to think that using VSA would improve my win% on my weekly trend following method?

IE. by only taking the signals in which VSA supports a breakout.

Nizar
Yes it works well with weekly,but I tend to use that just as a confluence rather than a signal,not that you couldn't.
In your case trading longer term you could look at introducing VSA as a filter,but not having done any work on longer term trading methods using VSA I really cant say. I would be more inclined to think that its use in exit filtering would be more beneficial than entry.

Where as short term its use in timing both entry and exit is in valuable.
longer term your looking at gaining as much trend as possible so you have to give some back to catch longer trends.Short term your trying to get the most you can out of a singular move or in my case wave.(Which could have a few pull backs rather than full corrective moves.
You dont need to buy the software to test this just the book so you can understand what you need to code.

How much volume for analysis?
A question I posed to Gavin at the conference.One which he didn't answer specifically.However I think I can.
There are 2 ways you can have to little volume and range to be of analytical value.
(1) The stock is traded to thinly----Don't trade it!
(2) The time frame is so low that this dilutes volume and range to a point where analysis is meaningless.

I get around it by not trading anything with (1).
Selecting a timeframe where I do get enough volume AND range to be able to use the analysis. This may vary.With the example stock thats around 90 minutes for the minimum but 180 is even better.

Why is the high bar on high volume here so bearish? I'm trying to work my way through this and am not really getting it. High volume on a higher close is not a good thing? Is the fact that it's opening lower of more concern than it not closing on its high?

When looking at only this bar and the bar before it, is it still a bearish signal or is it only bearish if looking at the entire picture?

Synergy.

Yes it takes a while to get your head around it but when you do its like walking out of a dark room.
The give away here and in any bar which shows EXTREME volume and often extreme range is the very NEXT bar.Once it turns from the gap open its obvious that sellers are now swamping buyers.You cant tell before that bar that that is definitely going to happen (Although Tradeguider will ALERT you to this strong possibility). The bar after the reversal clearly shows that buyers STILL want the stock,pushing prices back to open on good volume.

BUT look at the very next day almost NO VOLUME.Where are the buyers?
Holders notice this and sell strongly over the last 2 days,with some interest appearing around the 6c mark.This will become important soon as will the 6.9 to 7.0 cent area. Let me know when it clicks.

This trade is a great example. Until tomorrow! Where you'll see why and you'll see where Grey matter has to be used in conjunction with the software.

Cuttlefish
We crossed.
Like your thinking.---You'll enjoy tomorrow and the analysis.

 

[nizar]

Re: Recognising Volume-----opportunity or trap.

Nizar
Yes it works well with weekly,but I tend to use that just as a confluence rather than a signal,not that you couldn't.
In your case trading longer term you could look at introducing VSA as a filter,but not having done any work on longer term trading methods using VSA I really cant say. I would be more inclined to think that its use in exit filtering would be more beneficial than entry.

Where as short term its use in timing both entry and exit is in valuable.
longer term your looking at gaining as much trend as possible so you have to give some back to catch longer trends.Short term your trying to get the most you can out of a singular move or in my case wave.(Which could have a few pull backs rather than full corrective moves.
You dont need to buy the software to test this just the book so you can understand what you need to code.

How much volume for analysis?
A question I posed to Gavin at the conference.One which he didn't answer specifically.However I think I can.
There are 2 ways you can have to little volume and range to be of analytical value.
(1) The stock is traded to thinly----Don't trade it!
(2) The time frame is so low that this dilutes volume and range to a point where analysis is meaningless.

I get around it by not trading anything with (1).
Selecting a timeframe where I do get enough volume AND range to be able to use the analysis. This may vary.With the example stock thats around 90 minutes for the minimum but 180 is even better.

OK.
Thanks tech/a for your response.
What was the book title again, I'll get myself a copy.