I only use price/volume analysis once in a blue moon. It just doesn't give enough trade setups IMO. Also, it seems more like a counter-trenders tool. I use my own support/resistance system in combination with pivots and do cyclic wave trading most all of the time. But, anyway... Here are the keys to price/volume analysis. A volume surge marks a bull/bear capitulation and a likely short term top/bottom within a trend. A major volume surge can put in a solid/bottom top for quite a while. That's pretty much all there is to it. There are some price/volume + support/resistance traders out there who make a killing! Full Article - http://simplert.com/archives/170 If anyone wants my sierrachart volume indicator for spotting vol spikes with custom levels that you can set just send me a PM and ill post it for you. It's a lot easier than reading the levels manually if you can't code. Anyone got any other tricks to price/volume analysis? When I use it I just fade vol spikes into support/resistance for a couple handles a shot in futures. P/V analysis can be a lot more effective in stocks rather than futures I think. I have seen repetitive P/V patterns in stocks, but I don't trade stocks. I am thinking about working on a P/V - S/R analysis system for the next bull market. I kinda designed my current system of trading to handle both trending and non-trending markets, however... It would be better to specialize and focus my systems on exact conditions. It's gonna take me a while to figure out the key volume spike levels that are important for the ES on higher timeframes... I only know the numbers for the 30s-5m range. You have a few choices... Built out a trading system to handle both trending and non trending markets, build out one for trending markets and only trade trends, or build out one for non-trending and only trade choppy markets.
After further analysis I have decided not to go outside my old range of 5m and less charts for P/V analysis. Now I remember why I only used it for timing choppy markets... If anyone knows of a way to use it reliably for more than short term futures scalping and stock trading feel free to enlighten me. P/V with S/R on timeframe higher than 5m just doesn't give enough trade setups... Just leaving it as a my tool for timing scalps in choppy conditions...
In a market with high cyclic volatility and trending price/vol behaves different... You get these massive volume surges into support... Easier to time effectively with cyclic/trending indicators.
Then in choppy markets/slow uptrends you get easy P-V S-R short scalps... And places to take profits in trend.
I had definitely forgotten how much more precise my 1m P/V analysis charts were at timing exits... With my cyclic trading I never counter-trend anymore so just hitting the general areas and not worrying about precision timing is fine. Anyway... Hope everyone enjoyed my quick analysis and thoughts on P/V trading. It's good stuff... Your focusing on taking advantage of spikes in fear/euphoria in traders. It's not something you can predict the market with like cycles and wave counts.
You may want to read writing by Jack Hershey on this board. His is hundred times more advanced and precise than yours in price volume analysis and trading. He had another handle Grob109. Enjoy your reading with greater than 10,000 posts that some members here categorize as gibberish.