A question of volume...???

Discussion in 'Technical Analysis' started by fragmyass, May 13, 2005.

  1. Guys, your input please!

    I'm sitting here watching YM this morning, and something has confused me.

    If you look at the attached chart, you'll see I've circled an area on the top right which I thought represented shorts coming into the market, for a couple of reasons (its a 5min chart btw).

    firstly, on the two price bars circled, price has pushed up high during those 5-min periods, and then traded right down to finish that bar at the same as the entry price. This says more bears than bulls to me.

    second, the volume on the second bar is higher than a good amount of the previous volume - which says more bears than bulls (to me!) again, especially as on the next bar it trades even lower.

    But then this bar (the 1040 bar for those of you who are still awake - you! up the back there!) shows lower volume, yet goes on to represent a HL as the price then reverses and pushes back up through previous s/term res.

    So what should I have seen here? Anything? Or is there nothing significant?

    I was flat anyway, but I'm interested if any of you more experienced traders could elaborate for me.

    Thanks a lot.


    F
     
  2. Whoops.

    Kinda helps if I attach the chart, eh?
     
  3. Great - so 31 people have looked at the chart and no-one can tell me a thing?
     
  4. Hi Frag,

    If you look at the attached chart, you'll see I've circled an area on the top right which I thought represented shorts coming into the market, for a couple of reasons (its a 5min chart btw).

    You forgot something that's critical in trying to analyze individual intervals...

    You need analyze the price action that leads into those single intervals your trying to interpret.

    Regardless, lets say the shorts did show up around the 10180 price area and you got short...

    It pushed down to 10171 (a price that would have trigger either a breakeven trailing stop (10180) or 1 tick better to pay for the trade if it retraces back up...which it did.

    Now...the above is the trade management of that particular price action just in case you were wrong and can still profit.

    However, if your Short entry method has a lag in it (chasing) and you shorted below that 10180 area (high risk entry)...

    You better have a good method that either tells you its time to minimize the loss and reverse into a Long, dump it and stay on the sidelines or Long method (bullish reversal signal) that gets you back in after realizing you were wrong.

    Simply, don't freeze like deer in front of headlights unless you have very deep pockets.

    second, the volume on the second bar is higher than a good amount of the previous volume - which says more bears than bulls (to me!) again, especially as on the next bar it trades even lower.

    Be very careful about volume when you try to interpret single intervals that open and closed at the same price (equal) as in dojis...

    Lots of indecision...no bears dominating...probably what you saw was some profit taking for those that got Long around 10165 area and then re-entered or ADDED to those Long positions...

    After YM pushed below 10180 and then retraced back upwards above that 10180 area.

    Your were tunnel vision and saw that it retraced back down from the high of the interval but didn't see that it pushed very little below the open of those particular intervals.

    Although that's not a sign of strength (not being able to pushed lower and close the interval lower)...

    It's a sign that its not a sign of weakness especially when something odd was occurring in one of the other eminis :cool:

    Remember your past thread about how important is watching the other Eminis???

    Some replied and said it doesn't help and others (like me) saids it does help.

    I'll leave it at that and let you do your own homework instead of handing it to you on a silver platter.

    As for your comments about the next bar trading lower...if your referring to the lows of that white hammer line...

    Don't anticipate the price action until the interval completes unless you have a good understanding of the price action that leads into that interval.

    Back to the issue of those long upper shadows you saw on those two intervals you circled...

    They don't carry any weight with me when the long upper shadows either weren't part of a dark inverted hammer or the bulk of the upper shadow wasn't an intraday high.

    Simply, when its not a dark inverted hammer or an intraday high...

    I'll lower my chart interval and take a peek at the volume distribution in the long upper shadow.

    I see you had a 1min chart running side by side with your 5min chart...

    You should have used it because you would have saw a bullish reversal signal in there that involves volume between two intervals I've edited on your chart...

    Once again...I'll let you do your homework and figure this one on your own.

    I also posted a comment about having duplicate charts (same interval) in your workstation...that's not efficient use of your workstation.

    But then this bar (the 1040 bar for those of you who are still awake - you! up the back there!) shows lower volume, yet goes on to represent a HL as the price then reverses and pushes back up through previous s/term res.

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=18381

    Hope you enjoy your homework and if I were you I wouldn't avoid doing it...

    Why???

    Everything I've discussed above involves repeatable price action that are exploitable.

    Just as important...the price action I discussed above relates to each other or leads into each other...

    Reason why I try very hard not to get tunnel vision nor focus too much of my effort on a few intervals without seeing a bigger part of the playing field.

    Something else I want you to remember...

    If your going to analyze volume...you really need to not focus on only one chart interval.

    You need to look at the volume distribution on a lower chart interval and see if it supports what you see on that higher chart interval (your initial observation interval).

    That 1min chart you had gave you a lot of warning signs about Shorting in that 10180 area and should had you either taking some fast profits (ticks) or waiting on the sidelines for a bullish reversal signal if it appeared (it did).

    Last of all, although your question is about volume...

    I myself don't use volume most of the time except in a few strategies.

    P.S.Recently, I've been spending a lot of time making my own workstation more efficient after a close trading pal came to visit and showed me some problems in my visual interaction with the markets...

    His suggestions has made a big difference...easier to stay focus without getting tunnel vision.

    NihabaAshi
     
  5. Forgive an idiot weighing in (I am hoping to attract Jack, or maybe even someone smart), but here is my ex post facto analysis. (Isn't that the way ALL TA works?) Look at the attached one minute chart in Pacific time. I hope to persuade you to shift to it. (The one minute, not the PT.) I believe that just after 7:30 PT is where your example occurs. You see that the low of the AM was made on lower volume than the previous low. ("Tell me what does it mean? Is it like it seems?" - Steve Stills) Then in your misfortunate area, price is making more total volume on highs than on lows.

    But the real lessons are these:

    1) YM is too thin a market, at least at the time you posted

    2) if that is your trading screen, you are just flat fucked.

    All the best.
     
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  6. The two bars that you pointed out are not that signifigant in volume to make any difference to the overal resistance level (trendline) that was in place on all the action from the open.

    The most important bar was the the volume spike and breach of that trendline a few bars later.

    Here is a million dallar tip for you....(the rest of my lessons will cost you big time.):p

    Pay very CLOSE attention to those HIGH volume bars especially when they break a resistance level or trend line like that.

    They are the most important candles on any chart.
     
  7. wdscott

    wdscott

    Frag,

    You are monitoring intraday volume at the wrong fractal. 5 minute is a bit too long. From now on monitor only on a 1-minute fractal until you get more experience.

    Do this exercise:

    Starting at 9:54 draw trendlines over the volume till the end of the 1-minute chart (10:46). Pay attention to how volume flows with price. Some actions to monitor:

    Are new high being made on increased volume?
    And are those retracements from new highs made on lighter volume? Monitor the volume switch

    Are new price lows being made on lower volume than the preceding low?

    ---------------------------------------------------------------------------------


    Q. On the 1-min chart at what time did the volume trend "switch" from short to long?



    Monitoring volume at this fractal is not perfect, especially on choppy days. But in high volume situations it's a great "extra" tool to monitor price action. You just have to have the market experience to know when to use it and more importantly when not to use it.


    Regards,
    Dave
     
  8.  
  9. Hey, thanks - thats real nice of you to let me know I'm "flat fucked".

    What's wrong with it? What's yours look like?

    Thanks everyone for your comments - even the derogatory ones have some use.
     
  10. Thanks.

    I take it you're referring to the fact that all the volume is on the up bars, not the down bars, and that should have given me an indication as to the stronger direction.

    As goes to your other question, I'd say the 10.41 bar as its the highest volume of the day at the time.
     
    #10     May 14, 2005