Congestion Areas In Trend Trading.
In day trading there is no point to try to guess where the market will go next, it is impossible. Of course, you can try it but I bet you will blow out your account in no time. But there is a way that can give you an edge, that is waiting. Yes, you have to wait for the market to speak to you. usually when the trend is in place and you see a short pullback you can notice that there are price bars going up and down in a small narrow range (a congestion area), once a price bar closes over (for longs) or down (for shorts) the whole congestion area with high volume it is a sign that price will resume trend direction, you must act quickly and take your position. This is not 100% bulletproof but it has worked for me to reduce risk in my trades.
Hi,
Do you use accumulated volume at each price increment to determine high volume ? Or just watch it on the chart? If on chart what TF (ticks, vol, min.) do you look at?