Price moves higher in an up channel on increasing black volume. Sometimes, we have a bar make a new high on increasing black, then turn and end up closing below its open creating a situation where it appears price went higher on increasing red volume. We see such a circumstance in the areas marked on your chart. I match up my Gaussians by how price moves, and not by how the bar closes. PRV tells me increasing Black Volume, then i anticipate improved Price in an up channel. Should the Price bar 'spike' and head lower after making the new high, I still mark the bar as increasing black. Keep in mind, STR / SQU gives us the 'heads up' during Intra-bar Gaussian shifts. In other words, we need a different tool (other than Volume) to show us continuation or change. IF we opened a 2 minute ES Chart, you could see the Gaussian change more clearly when it happens Intra-bar on the 5 minute charts. If I need to 'fan out' a channel (when price leaves the channel on decreasing volume) I usually fan from my last Point Three. Not only does the decreased slope of the new (fanned) channel visually represent a reduction in market pace, but using the Point Three vs. recycling the Old Point One normally results in fewer fans as time moves forward. Either way works. Choose whichever you feel best allows you to 'see' the market. I hope the above information helped to provide some clarity for you. If not, please let me know. - Spydertrader
That volume spike bar can make it hard to see inceasing/decreasing volume bars... Check out this snippet in addition to Spyder's comments and I think you will get the idea. Hope it helps -John <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1453727>
Hi nkhoi, Thank you for your suggestion I had annotated the b2b and the r2r, but I think they are annotated in a different way. I try to annotate like the picture annex to force me to draw in advance what to expect next... For instance, when comming from a FTT we have "decr red", so I expect to have "incr Red" when price reaches the RTL for a BO or then we have "incr black" and we have a FBO (this can be seen in the PRV when price touchs the RTL). Either way, this gaussians annotations made me realize how much they are important...
Thank you for your help...what you said made me think... Of course..."Volume precedes price" I have heard that so many times but I never thought on that at that time...it makes all sense. I went to my research and found a pdf from PointOne that describes this movement so well. I have to thanks PointOne for this and hope he doesn't mind if I put it here again. Regards Pedro
My chart and my thoughts. I annotated my chart between 1055 till 1120 with the rational for entering and exiting trades. This is typical of my results where I have decent initial entries and then misread and overreact to things that I think I see on the charts.