Volume: How can it be used in trading?

[tech/a]

Shoes.

Charts like this have massive resistance zones to battle through as you have marked.So any forward movement is going to be a slog.

I look for opportunities at extremes.
Long at the exhaustion end of a corrective move or short (If I traded short) at the end of a strong trend (usually clear).

Or in smaller consolidations (up to 10 bars) within trends.

Its quite likely there will be plentiful on going shot opportunities rather than long coming up.

 

[$20shoes]

Shoes.

Charts like this have massive resistance zones to battle through as you have marked.So any forward movement is going to be a slog.

I look for opportunities at extremes.
Long at the exhaustion end of a corrective move or short (If I traded short) at the end of a strong trend (usually clear).

Or in smaller consolidations (up to 10 bars) within trends.

Its quite likely there will be plentiful on going shot opportunities rather than long coming up.

Thanks Tech. Appreciate the feedback.
Shorts - certainly shaping up that way isn't it!!

 

[tech/a]

So after the ig BANG thought Id go back over a few charts and have a critique on how they went relative to the analysis which was done here.

Good time to have a look dont you think.
I went back to HGG chart.

This is how its been going from BLY backwards.
to HGG

BLY Respecting the lowest zone in our ZONE resistance and support analysis.
ABT as expected in analysis
ABY Distribution as we expected.
CRUDE Crapped itself No demand as we pointed out.
GOLD Still long?
HGG $2.55 had significance
HGO Came off as expected.
RSG the only slight blemish not spot --- but the next 3 bars set the scene.

 

[Kryzz]

VSA opinions for the XJO anyone?

 

[tech/a]

Pretty obvious that the lack of volume is heralding a rally of questionable conviction.

 

[Kryzz]

Pretty obvious that the lack of volume is heralding a rally of questionable conviction.

Yeah, I gauged that much, was just seeing if there was anything more to it... guess not.

 

[It's Snake Pliskin]

Yeah, I gauged that much, was just seeing if there was anything more to it... guess not.

It'll be interesting to see how the stopping volume has held up if the pullback comes quickly.

 

[lenny]

Hi Kryzz, What data provider do you use?

The reason i ask is that i use paritech data and it doesn't provide volume for the indexes.


Regards
Lenny

 

[tech/a]

Yeah, I gauged that much, was just seeing if there was anything more to it... guess not.

There is a bit more but not on that specific day.
the analysis is an on going book with a new chapter each day.
We can clearly see the "history" analysis. no demand and no conviction and Friday proved this--the high of Thursday was clearly tested and price retreated from the old high of Thursday.

So far today the gains of the previous 4 sessions have been wiped out.
We are now going to test the low of 7/05/10

According to Elliott analysis we will see the low minor support level exceeded as price moves down toward 4100

The combination of the 2 anlaytics gives more likely alternatives as the price action takes place.
We can anticipate ahead. Which is what we did when suggesting short back 4 days ago.

 

[The Edge]

Sunday 16 May 2010

Shaunkris 89:

The sharply increased volume going into the lows, culminating with the peak volume at the low, the low a wide-range bar, [and it is difficult for me to see
exactly where the close was...it looks like it could be under the 4,500 level],
begins a compelling story.

The increased volume as low was made reflects a likely transfer of risk, from
weak to strong hands. What we know about smart money is that it does not
sell lows or buy highs. What we know about the public is that it is prone to
selling into lows, buying into highs. That appears to be the process here.

Two considerations, for now. The first is the speed with which the decline
occurred. That is was so fast usually means a relatively weaker recovery. Actually, three considerations. I just noticed the position of the last high
prior to this low. The second consideration, now added, is the fact that
XJO, [do not know what that is, but a chart is a chart], has been in a broad trading range, and this last low has had to clear out a lot of stops under the previous November '09 and February '10 swing lows.

My guess is that the function of the low was to wash out all the stops under the market, get rid of any weak holders, and make XJO look unappealing, at least for now.

Note how the last high occurred on small range bars, symptomatic of a lack
of demand, and a lack of demand can lead to sellers coming in..which did occur. Contrast that with the wider range bars at the lows, coupled with the increased volume. I am digressing a bit, but it stems from the fact that the low and volume you question is better viewed when taken in context with the surrounding activity.

The third consideration is the quality of the rally off the low. As was already
pointed out, the volume diminished, not totally unexpected given the speed
with which the decline occurred. We do learn a few things from it, however.
The position of the close at the low, on the highest volume since December,
suggests there were buyers, not only on that day, but the other high volume days preceding. This goes back to putting your day in question in context to other market activity, for it is an evolving process, and in this portion of the chart, the more active transfer of risk.

This current rally should/will lead to a retest of the low, and it is the quality and character of HOW the retest develops that will provide the important clues for market direction. If the low is retested on smaller range bars with declining volume, this tells us that supply, [selling] has dried up.

If the retest shows wider ranges and increasing volume, the low may not hold. Given HOW the low occurred, and where, it would appear the odds favor it holding. All you need now is confirmation from watching the retest.

From my perspective, there is a lot moreto it than was initially surmised here.

Cheers!

Apologies for the lack of line consistency. I am not familiar with how the lines end/begin for the next one. Subtance over style, if there be any substance to be found.

 

[Kryzz]

Hi Kryzz, What data provider do you use?

The reason i ask is that i use paritech data and it doesn't provide volume for the indexes.


Regards
Lenny

Lenny, the data is from norgate premium data: http://www.premiumdata.net/.

Cheers for replies The Edge and Tech/A.

 

[tech/a]

Edge.

Nice summary.

The XJO is the Index of the ASX 200
Interesting developements so far today.

The sell off has been so dramatic I favor a break of long term support.

 

[The Edge]

Sunday 16 May 2010

Thank you, Tech. I had one more comment to add after signing off that pertained to the quality of the current rally. With your added information that XJO is a stock index, it makes my added comment more relevant.

The current rally, lacking volume, is somewhat weak. One important aspect about weak rallies is that they most always lead to lower prices. Again, the speed of the decline is an important tell. How price responds will comfirm its importance, and the read of developing market activity will support the primary market activity.

Not mentioned, an error on my part, is acknowledging the trend, which is obviously down, at least on the daily chart shown. THAT dictates one's overall strategy.

My main focus is the S&P, and that index trend as been confirmed down, and short positions were taken at 1158 with half covered on Friday at 1129, staying short the balance. Good that I was unaware of XJO. It might have made my analysis more aggressive, but from an existing bias.

FWIW, no stock index will remain unscathed. The "too big to fail" epidemic, rash and an economically suicidal mentality is now spilling over countries that are deemed worth trying to save. "Paper money will always reach its intensic value, which is zero," paraphrasing Voltaire. It is fiat paper supporting all efforts to save companies, banks, now countries. Oh, dear. I lapsed into an editorial opinion.

Cheers, all.

 

[tech/a]

It is fiat paper supporting all efforts to save companies, banks, now countries.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

You may find this as interesting as I do.
Note World Debt V GDP.

 

[ambika123]

Thx for the info.I Will keep that for future reference.
dexterity.in

 

[tech/a]

XJO has been pretty well spot on to the analysis shown above.

 

[hotqld]

Has anyone been using Turbo Trader for identifying intraday volume increases and doing any good from it?
I dont mean the FX one this one has live streaming data from the ASX.
Thanks

 

[tech/a]

This isnt Turbo Trader But Tradeguider

Fading volume is a good earn
These are some old charts I have on file but common with all of them.

 

[ThingyMajiggy]

Got a query with any volume followers out there, how would you read the following chart, its a 2 minute of CL, I have hidden the latest few bars at the time I took the screenshot, because I want to see how you would read it, what do you expect price to do from here on? I'm interested to hear what the candle traders have to say about that too, that would be an bearish koala butterfly doji engulfing swallow candle or something wouldn't it? (all you guys that look at or watch crude probably know what its done since this but try not to peek : )

 

[Dracuu]

Got a query with any volume followers out there, how would you read the following chart

I think it will take out the top of the last bar shown within 12 minutes. Did I win?