Volume analysis – The Key to the Truth

[PAINTACE]

Hi Petar, great work

Just looking at your recent EUR/NZD short. I know this is after the event but it will give you an idea of how I look at things.

EUR/NZD (Based on my MT4 data feed)

Daily chart:
In a good down trend with 9 June taking out monthly lows.
21 June closed at a new year low but more importantly took out Dec 2015 low. The volume did not increase at these levels as I would have expected defence or breakout activity. Down trend at risk.
22 June even less volume, the day before Brexit vote so understandable.
23 June a push down on increasing volume.
24 June Massive volume, 2nd highest of the year, as Brexit result released. The candle did close downd but well off its low and the range was not directional.

Going into 27 June: based on daily analysis, downd trend has come to rest. Sideways or pull back likely.

The 24 June needs to be looked at in more detail for clues.

4 hour chart: (bad time frame for analysis as brokers use different settings) The second candle of the day had the highest volume but gave no direction. It did close up and so did the following one; buyers!
The 4th candle of the day had the biggest range and closed down into new lows BUT the volume was less than the prior two candles. Last bar of the day was no supply.

Going into 27 June: based on combination of daily and 4 hour analysis, supply gone or going and buyers entering the market.

24 June, 1 hour chart; early morning chaos followed by a directional move down to new lows. The high volume at these lows resulted in price moving up, buyers!

So how to trade 27 June: I don't see strong supply and the downward trend momentum is dying. Looking around the time you went short, I don't see any good reason to go long. At that point in time, sideways would have been my guess; no trade.

 

[Petar Jacimovic]

Hi Petar, great work

Just looking at your recent EUR/NZD short. I know this is after the event but it will give you an idea of how I look at things.

EUR/NZD (Based on my MT4 data feed)

Daily chart:
In a good down trend with 9 June taking out monthly lows.
21 June closed at a new year low but more importantly took out Dec 2015 low. The volume did not increase at these levels as I would have expected defence or breakout activity. Down trend at risk.
22 June even less volume, the day before Brexit vote so understandable.
23 June a push down on increasing volume.
24 June Massive volume, 2nd highest of the year, as Brexit result released. The candle did close downd but well off its low and the range was not directional.

Going into 27 June: based on daily analysis, downd trend has come to rest. Sideways or pull back likely.

The 24 June needs to be looked at in more detail for clues.

4 hour chart: (bad time frame for analysis as brokers use different settings) The second candle of the day had the highest volume but gave no direction. It did close up and so did the following one; buyers!
The 4th candle of the day had the biggest range and closed down into new lows BUT the volume was less than the prior two candles. Last bar of the day was no supply.

Going into 27 June: based on combination of daily and 4 hour analysis, supply gone or going and buyers entering the market.

24 June, 1 hour chart; early morning chaos followed by a directional move down to new lows. The high volume at these lows resulted in price moving up, buyers!

So how to trade 27 June: I don't see strong supply and the downward trend momentum is dying. Looking around the time you went short, I don't see any good reason to go long. At that point in time, sideways would have been my guess; no trade.

Hello there and welcome to the thread,
Feel free to post your charts and analysis so we can discuss together...
Yes, basically the EUR/NZD is in strong downward trend but now is in a consolidation period. We may see resuming of the downward trend but I am neutral on EUR/NZD.

I have my main position on USD/CAD (+40 pips currently) and GBP/USD (+160 pips currently) >
So far, good progress and i secured GBP/USD on BE >

 

[PAINTACE]

Petar, what is the data feed on your recent USD/CAD H4 chart ?

Looking at the marked long climax Green candle with the highest volume followed by 3 red candles, I have these volumes on my MT4 data feed g27447, r28385, r33869, r35776.
My chart gives a very diffent volume picture to yours.

 

[Petar Jacimovic]

Petar, what is the data feed on your recent USD/CAD H4 chart ?

Looking at the marked long climax Green candle with the highest volume followed by 3 red candles, I have these volumes on my MT4 data feed g27447, r28385, r33869, r35776.
My chart gives a very different volume picture to yours.

Hello there,
Don't pay to much attention on tick volume. Every broker got different tick volume. I use tick volume only to have one more source to watch but mainly I watch futures market volume. The spread of the bar-candle is very important. If there is the ultra-wide spread of the bar and I see ultra high volume on tick and futures market, I know it is climatic action. The main point in professional trading is to become a market maker and think different from most of the crowd. Forex is very speculative and wild by nature. Only if you are a good speculator, you can benefit on Forex. Most of the traders trade same principles over and over and they won't even get that they are just "food" for big boys.

Example > Let's say, there is a strong upward trend on given currency pair. You spot the flat base of few days and finally the price go and break base upward. it is too obvious for everyone that this is buying opportunity. But, it is also too obvious for market makers that they know where are most of the crowd positioned. Now, they spot an opportunity to trap the crowd and create a fake breakout. On this way, they closed in SL positions from sellers before the breakout but they also created a lot of orders for breakout traders. Now, they sell with big orders and they fake breakout buyers. Once the breakout buyers see that they are in trouble, they are forced to exit position in SL and reverse position (sell). Once the public join market makers the strong movements appears.

This is just one of strategies the market makers doing, but the point is that you must think like market makers if you want to become professional on Forex. On the Stock market is different. There is centralized volume and everything is centralized. So, if you have good earning of the company, good pattern, and good volume activity, you are already in good position. On the Forex is totally different.

 

[Petar Jacimovic]

Hello traders,
I found an opportunity for 30-40 pips on USD/JPY. I shorted at 102.68 with SL 12 pips. I will try to take around 40 pips. I found a fake breakout of 20 bars high and there is no strength in the previous upward leg. The trend is downward and I like to trade fake breakouts in a trend.

 

[Petar Jacimovic]

I am bullish on GBP/USD intraday >
I found successful testing of supply and upward trendline in a low volume, which is a sign that we may see the futher upward price.

TP set at 1.3570 but will secure at 1.3497.

Petar

 

[Petar Jacimovic]

Bought EUR/USD.
I found successful testing of the upward trendline, which represents that buyers supporting upward price.
Main TP at 1.1240.

 

[Petar Jacimovic]

Hello traders,
I am bullish on the Gold from the price of $1,319.00. I found the responsive reaction from buyers at the price of $1,312.00, which is a good sign for the further upward price. The interesting thing there is the point of control from 2 days ago. I have found a point of control at the price of $1,314.00. Since those responsive buyers came near the $1,312.00, this is an indication that they want a higher point of control and the higher price at the moment.
POC from yesterday at the price of $1,319.00 is on the test right now.

 

[Petar Jacimovic]

I am bearish on USD/CAD from 1.2988. Will try to take 40 pips (1.2945), the risk is 15 pips. I found single print at 1.3000. This is clean neutral day and trading on weakness to the POC (point of control is a good choice).
The bar closed in the middle in a very high volume, which is a clear sign of weakness...

Petar

 

[Petar Jacimovic]

Classic re-distribution on EUR/USD. Sold at the price of 1.1060 with SL 50 ppips and TP 150 pips.
TP set at the level of 1.0915.
FE 61.8% set at the price of 1.0880.

 

[Petar Jacimovic]

Bearish on USD/JPY at 102.57. I found strong downward momentum in the background. Also, I found few up-thrust bars near 102.70 and re-distribution phase.

My TP is set at the price of 102.15.

 

[MrKompis]

Explain test of supply

USD/CAD bullish opportunity >

I saw strong upward momentum and broken ascending triangle. I bought at 1.3110, SL is around 40 pips and I am going for 200 pips
TP around the price of 1.3300. There is also a successful test of supply in a low volume, which is a good sign for further upward continuation.

First I want to say that this is a really interesting thread.

Second, I don't really understand what you mean by "test of supply". When the price stands still at a support and the volume is low, is it indicating that there is less supply? Or that there is no interest from buyers and sellers and the price stand still?

Third, I don't understand upthrust.

 

[Petar Jacimovic]

First I want to say that this is a really interesting thread.

Second, I don't really understand what you mean by "test of supply". When the price stands still at a support and the volume is low, is it indicating that there is less supply? Or that there is no interest from buyers and sellers and the price stand still?

Third, I don't understand upthrust.

Hello, MrKompis and welcome to the thread
Testing is a most important bullish signal in volume analysis. it can be on high or low volume. Usually, we like to see testing of low volume but when there is high liquidity day, testing on high volume is also ok. It is called testing of supply because the smart money testing the previous area of supply (heavy supply). They need to test because they must make sure that there is little or no supply left before they establish buying positions.Test bar usually has a long lower tail, dipping into territories of previous low where we see high volume before closing ideally in the middle or high. It probes down then go up. If we see the unsuccesful test, this means that further downward is possible and that smart money must wait for a better opportunity.

Up-thrust bar indicates that supply overcoming demand. Upthrust is recognized as a wide spread up the bar before closing on the low. When seen market tops, they are a major sign of weakness. Volume can be either high or very low. I will prefer a high volume upthrust and recognize it as a buying climax as well.

Upthrust is usually a rapid up-move, luring herders and catches stop. If there was the weakness in the background, an upthrust will confirm the sign of weakness in the background. In the volume analysis, we always want to follow the general trend and the intraday trend. Gold example is Gold I am posting you here... Also, we never trade isolated bars, we alwas want to see context of the bars and see what is current background for instrument we watch. Do we have weaknes or strength in the background and what is the trend.

I will post trading ideas next week and we can discuss together. Also, my advice is to read the book Master the markets by Tom Wiliams (the creator of Volume spread analysis)

Petar

 

[MrKompis]

Hello, MrKompis and welcome to the thread
Testing is a most important bullish signal in volume analysis. it can be on high or low volume. Usually, we like to see testing of low volume but when there is high liquidity day, testing on high volume is also ok. It is called testing of supply because the smart money testing the previous area of supply (heavy supply). They need to test because they must make sure that there is little or no supply left before they establish buying positions.Test bar usually has a long lower tail, dipping into territories of previous low where we see high volume before closing ideally in the middle or high. It probes down then go up. If we see the unsuccessful test, this means that further downward is possible and that smart money must wait for a better opportunity.

Up-thrust bar indicates that supply overcoming demand. Upthrust is recognized as a wide spread up the bar before closing on the low. When seen market tops, they are a major sign of weakness. Volume can be either high or very low. I will prefer a high volume upthrust and recognize it as a buying climax as well.

Upthrust is usually a rapid up-move, luring herders and catches stop. If there was the weakness in the background, an upthrust will confirm the sign of weakness in the background. In the volume analysis, we always want to follow the general trend and the intraday trend. Gold example is Gold I am posting you here... Also, we never trade isolated bars, we always want to see context of the bars and see what is current background for instrument we watch. Do we have weakness or strength in the background and what is the trend.

Great explanation

I will post trading ideas next week and we can discuss together. Also, my advice is to read the book Master the markets by Tom Williams (the creator of Volume spread analysis)

Looking forward to it

 

[Petar Jacimovic]

Hello, MrKompis and welcome to the thread
Testing is a most important bullish signal in volume analysis. it can be on high or low volume. Usually, we like to see testing of low volume but when there is high liquidity day, testing on high volume is also ok. It is called testing of supply because the smart money testing the previous area of supply (heavy supply). They need to test because they must make sure that there is little or no supply left before they establish buying positions.Test bar usually has a long lower tail, dipping into territories of previous low where we see high volume before closing ideally in the middle or high. It probes down then go up. If we see the unsuccesful test, this means that further downward is possible and that smart money must wait for a better opportunity.

Up-thrust bar indicates that supply overcoming demand. Upthrust is recognized as a wide spread up the bar before closing on the low. When seen market tops, they are a major sign of weakness. Volume can be either high or very low. I will prefer a high volume upthrust and recognize it as a buying climax as well.

Upthrust is usually a rapid up-move, luring herders and catches stop. If there was the weakness in the background, an upthrust will confirm the sign of weakness in the background. In the volume analysis, we always want to follow the general trend and the intraday trend. Gold example is Gold I am posting you here... Also, we never trade isolated bars, we alwas want to see context of the bars and see what is current background for instrument we watch. Do we have weaknes or strength in the background and what is the trend.

I will post trading ideas next week and we can discuss together. Also, my advice is to read the book Master the markets by Tom Wiliams (the creator of Volume spread analysis)

Petar

TP met
All you need is volume analysis and riding with the trend.
After i scaled out position at $1,348.00 I found today another great opportunitiy for buying Gold. There are few test bars at the price of $1,346.00.According to 30M time frame, tests happened near SMA21, which is very good sign of strength, there is no real interest from smart money for lower price, which means that they will continue to buy. My TP is set at the price of $1,363.75. Largest extension will be at $1,376.00.

Wish you good trading
Petar

 

[Petar Jacimovic]

Hello there,
I established buying position on USD/CAD at 1.2905. Very simple and clean setup. Upward trend, broken previous swing high and successful test of supply. I already secured position on BE and my target is at the price of 1.2970.

 

[Petar Jacimovic]

Hello there,
I established buying position on USD/CAD at 1.2905. Very simple and clean setup. Upward trend, broken previous swing high and successful test of supply. I already secured position on BE and my target is at the price of 1.2970.

+65 pips today on USD/CAD

 

[Petar Jacimovic]

Hello everyone,
I found an interesting setup on GBP/USD. I am bullish on this currency pair from 1.2983 with SL around 40 pips and will try to take around 180 pips. I found the responsive reaction from buyest at the price of 1.2790 and the GBP/USD changed behavior from that point. Later on, I saw a successful test of supply and i established buying positions.

TP at 1.3180.

 

[Petar Jacimovic]

I found interesting opportunities on EUR/JPY and EUR/GBP.
I will post first EUR/JPY. This currency pair is in strong downward momentum and I found a classic bearish flat pattern and successful breakout. Also, there is decreasing in volume on the upward leg, which is a sign that buyers don't have power for a larger correction.

SL 35 PIPS and TP is set at 110.90 (150 pips)

 

[Petar Jacimovic]

EUR/GBP Buying from 0.8592 with SL 35 pips and target at least 150 pips. I found strong upward momentum in the background and cup&handle formation. When the trend is in place this formation is very strong.

Lets seee >