Interesting Volume Observation

Discussion in 'Technical Analysis' started by ddefina, Dec 6, 2002.

  1. ddefina

    ddefina

    While following the chipmunks, I noticed volume spikes today are closely followed by reversals. Has anyone noticed this phenomenon in the past or is it just a coincidence? Not being a scalper it doesn't affect me, but might make for an interesting scalping system.
     
  2. Tacsian

    Tacsian

    I think of them as buying or selling climaxes. Yes I watch them and make use of them for short term direction. Often those surges mark a temporary resting spot for the trend as they exhaust the buyers or sellers for a few moments while they reload so to speak, or as you pointed out, on smaller time frames, reversals.

    I don't just play them by themselves though, just for reference.
     
  3. ddefina

    ddefina

    Could it be program buying/selling followed by unwinding of the position?
     
  4. Tacsian

    Tacsian

    Definitely sometimes those are program spikes capturing a few ticks, but I would watch the eprem and prem for clues to when those programs go off, rather than just the straight volume. I do know some traders who use the eprem and volume together for a viable edge in their trading method.
     
  5. Volume Surge (as I call it... we all have different names for different events) are just times to wach out for... most of the time the market has a minor retracement but some of the times the market bursts through from that point....

    I'm very watchful with what happens from there...