Volume: How can it be used in trading?

[tech/a]

T/H has it in simplistic form.
Will comment on the bars when I have some more time.

 

[tech/a]

Exited GRR on Trailing stop.

Strong supply entered at 78.5c has been no demand since.(60 min chart)

 

[WaveSurfer]

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.



Yes
And
Yes.

Thanks tech. I understand and agree with what you're saying about the higher time frames being more significant for the volume S/R. I thought it was a good point from LKR to use that "honing" method for general volume interpretation.

Keep posting away, I'm learning a lot

 

[tech/a]

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.

Exited GRR on Trailing stop.

Strong supply entered at 78.5c has been no demand since.(60 min chart)

Interesting I exited due to lack of support at 75.5c
So far with the pivot reversal now in for today this has played into Franks senerio --- so far.

 

[tech/a]

HGG
My take on your comments.

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.

Supply swamps demand (we dont know its going to go sideways---YET)

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

No supply.
Next bar confirms.

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

Test.

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

No demand---we know its no demand as this bar is higher than the previous bar.

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

Test

So now we have a high and low test in this consolidation. Trading below is bearish above bullish.

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
Test again --actually the 1st and 6th are also tests with support to the low side. No hint that sellers have yet gone or dried up.


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

Breakout on low volume no supply left

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

Sellers coming in


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

Low volume Up day confirming breakout.

Today
Supply coming in --- Break away gap.
60 min chart is helpful here to see what actually is happening inside this bar.

So what do you think this is telling us about todays bar?

 

[roland]

HGG
So what do you think this is telling us about todays bar?

Well, it looks like there was some heavy buying temporarily soaking up supply - then the supply kept coming back.

 

[tech/a]

Well, it looks like there was some heavy buying temporarily soaking up supply - then the supply kept coming back.

Do you think $2.55 may have some significance?

 

[roland]

Do you think $2.55 may have some significance?

Resistance on 21/10/2009 was around this level and it bounced off $2.50 on 18/11/2009, so that would be significant. 12 month high is $2.67, so each of these levels would have locked in holders wanting to cash out. The $2.55 mark would give holders that bought at highs on the 18/11/2009 a small profit with their exit.

 

[tech/a]

Wow.
Pretty in depth there!

Simply yesterday we see strong support at $2.55.
A break here would be significant.

Just a hint with volume analysis in any periodicy minutes to a month---a single bar remains valid for 2-5 bars in which time the analysis will be proven as either true or false. So when we look at a bar its information is proven true or false within 5 bars beyond that other bars will have control.

 

[ThingyMajiggy]

Just a question for all you hardcore volumers, have you noticed any signs/hints that an up move will end, it seems(for me, anyway) that it is a lot easier to see when support comes in rather than when its going to sell off, like I have attached, chart of Gold the other night, see how its pretty obvious when support was coming in, yet when it tried going up, volume would just die out, then big push down again- big volume comes back in, bounces it back up, but there doesn't seem to be any real obvious signs in the other direction, theres nothing that stands out(other than the fact of drying up volume on the up moves) that the up move will end, like it does with the down moves. I thought could that big volume still be in the move, Gold did have a reasonable rally after this, back up to about 1154-56.

Its just something I thought I would run by you guys in here, sometimes it does do the same as the down movements, big volume will come in and it will fade but it just seems far less obvious and less common on the ups than the downs.

Because of this, I find it harder to determine exits when going long compared to when going short.

Also to those that fade volume, how does that work on break-outs, say there was strong resistance @ $5.00(just for this idea). It had been drifting up there, then it bursts above on huge volume into new ground, but didn't close on its highs, how would you handle this? Still fade it? or see it as strength because of the break-out?

 

[tech/a]

Sam

Good questions I have sometime to answer.
I don't have futures from esignal but will get it re launched (I must get into Forex!) But I'll re label your chart and ask you to then have a look at a session with the info I give you and report back with what you found.

Firstly there are 2 volume tags I look for.
(1) Extreme Volume > 4 x 10 period volume the > the better!
(2) Extremely low volume < .25 x 10 period volume the < the better!

These tags are the flashing lights on a chart that warn ---- Take action---soon.
All other bars combined with volume tell paragraghps of the story un folding--they arent the HEADLINES!

So lets move to your gold chart. All in hindsite and hopefully youll report on R/T next session.
The story is told in ANY timeframe.

Ok Now to CONTEXT.
Where the story has been headlined by the 2 Tags.
Firstly we look FIRST for EHV (Extreme High Volume bars) then we look for ELV Tags.

We know that Markets hate extremely high volume---it pulls the instrument out of equilibrium and will attempt to return to equilibrium before defining value at THAT point.
Remember VSA is only valid on a bar or group of bars for 2-5 more periods
after that time other bars show the way.
However EHV bars are control bars and act as volume Support or Resistance.
(Areas where price will come back to or acts as resistance going forward)

Sams chart look a bit of a mess after Ive noted everything on it but if you take your time to read all the bits I'm sure it will make sense. Let me know how you go Sam next session ---wether it was easier to read. try a 2-15 min time frame--more info. 3 min seems to be the VSA Futures guys.

There are TEST bars which are very important but due to the chart looking so over run I havent marked them on this one.
We look for tests after lows and highs are made to see if they succeed or fail.
Ill explain more if people want to go through them.

CLICK TO ENLARGE

 

[ThingyMajiggy]

Sam

Good questions I have sometime to answer.
I don't have futures from esignal but will get it re launched (I must get into Forex!) But I'll re label your chart and ask you to then have a look at a session with the info I give you and report back with what you found.

Firstly there are 2 volume tags I look for.
(1) Extreme Volume > 4 x 10 period volume the > the better!
(2) Extremely low volume < .25 x 10 period volume the < the better!

These tags are the flashing lights on a chart that warn ---- Take action---soon.
All other bars combined with volume tell paragraghps of the story un folding--they arent the HEADLINES!

So lets move to your gold chart. All in hindsite and hopefully youll report on R/T next session.
The story is told in ANY timeframe.

Ok Now to CONTEXT.
Where the story has been headlined by the 2 Tags.
Firstly we look FIRST for EHV (Extreme High Volume bars) then we look for ELV Tags.

We know that Markets hate extremely high volume---it pulls the instrument out of equilibrium and will attempt to return to equilibrium before defining value at THAT point.
Remember VSA is only valid on a bar or group of bars for 2-5 more periods
after that time other bars show the way.
However EHV bars are control bars and act as volume Support or Resistance.
(Areas where price will come back to or acts as resistance going forward)

Sams chart look a bit of a mess after Ive noted everything on it but if you take your time to read all the bits I'm sure it will make sense. Let me know how you go Sam next session ---wether it was easier to read. try a 2-15 min time frame--more info. 3 min seems to be the VSA Futures guys.

There are TEST bars which are very important but due to the chart looking so over run I havent marked them on this one.
We look for tests after lows and highs are made to see if they succeed or fail.
Ill explain more if people want to go through them.

CLICK TO ENLARGE

Thanks for that tech

Not sure I understand what you mean with the:

Firstly there are 2 volume tags I look for.
(1) Extreme Volume > 4 x 10 period volume the > the better!
(2) Extremely low volume < .25 x 10 period volume the < the better!

Is this the calculation you use in your program or something?

Also, why would you recommend a larger timeframe chart? I prefer the 1 minute as it shows more detail, I have attached a 1 minute and 2 minute chart of Oil on Friday night, I think the 1 minute shows better entries, more "ELV" bars giving off more indication of future direction?

Could you do your analysis on these charts? I haven't put anything on them, blank canvas for you My VSA has gone a bit rusty but I still keep an eye on volume as I said earlier in this thread I think, mainly the extremes, extremely high or low volume as you do tech, otherwise I don't take much notice of it, but I think a good entry long would be the ELV candle just after the "00:47" area and also the ELV after the "1:10" area, those 2 up candles. But back to my original question about determining an exit from longs, as its not as obvious when an up move will end compared to when a down move will end, it is a little more obvious on these charts, around that 1:10 area on the 1m chart, reasonable volume came in on that wide range up candle, then you got the no demand up candles just after it, that is a nice entry short IMO, would you agree tech/others?

But that is probably the only obvious entry short or exit long by rising volume on an up move, earlier, where that huge volume spike is(referring to the 1m through all this), it had that nice little bounce up, then there wasn't any real noticeable sign that that move was going to end, that last up bar(00:29 area I'm talking) had less volume, then the low volume down bar, doesn't seem weak to me, yet it come off pretty hard, plus...average volume on an up move is quite a good thing I hear?

The only sign that it was going to come off I think is the fact that the low(er) volume down bar following that last up bar was a test bar, that failed(following bar closed lower)?

Then as you can see it came off hard again, then once again the high volume came back in and support was found and the process starts again

 

[tech/a]

Sam I have completed analysis on the 1 min chart

Could I have a 5 min please
Private mail it if you wish.

 

[Trembling Hand]

Could I have a 5 min please
Private mail it if you wish.

Here are two. Because Crude is 24 hrs with a cash or day period were 90% of the volume is done I've include two charts to better compare volume. First one day session only, second a 24 hr.

 

[tech/a]

Thanks Sam and T/H.

I will use T/H's as it shows a little more of the chart than Sams (Sent Private mail).

Longer timeframes tend to give clearer signals where range and volume have more time to manifest.

However in this instance the 1 min chart has more info than the 5 min.
Each however would have picked up similar ticks.I'll sign up for Data tommorow and get involved in these.
Will take a while t get the "feel" of Crude/Gold Etc.

 

[ThingyMajiggy]

Alright here is one for discussion.

Thoughts on ABY?

I have highlighted the range of the high volume bars, that latest bar looks like a test? (remember- rusty on my VSA)

I have also attached the weekly.

 

[tech/a]

Sam

In my view this has some work to do.
Looks like distribution with wider range bars being characteristic of this.
If you scroll your weekly chart back to march last youll see the pattern below nice and tight.

 

[ThingyMajiggy]

So something like ABP is a better candidate then?

 

[tech/a]

Its one that Id have on the watchlist looking for something that says its awakening.
Have a look at the charts on the other thread


https://www.aussiestockforums.com/forums/showthread.php?t=19396

 

[$20shoes]

I have tried to map some volume zones onto BLY daily. Still trying to get the hang of this.
I'm interpreting the large drop on 19/2 as supporting volume because the price action halts all of a sudden at this level and goes sideways. This coincidentally or not, happens to be in the same range as the 13/11/09 bar. Low volume test affected yesterday followed by a positive move today.