Quote from smilingsynic:
When I read statements like this, I just want to shake my head. I do not mean any disrepect here, but volume is much more than an "indicator".
ES, like any auction market, is established on the principles of supply and demand. Pivot levels, support and resistance levels, and other key chart levels represent areas where participants in the past have decided that the price was either too cheap and they had to buy/cover their shorts (support) or that it was too rich and they had to sell/sell short (resistance). Breaking through those levels with adequate levels of participation suggests that those opinions have changed, and that equities in general are being repriced.
If a market "breaks out" to a new high (for the day, for the week, whatever) and there is no buying, price will go back. This is apparent on the charts. Volume has clearly dried up. If there IS buying, price will more likely stay at that new level. If the price hits a new high, and the reaction back to support is on light volume, that suggests that most who bought the new high are not interested in selling. If the pullback is on high volume, that suggests that there is more potential downside, and that those who bought the new high are now holding the bag.
I don't have time to get into all of this now, but suffice to say, the principles of supply and demand apply to all economic enterprises. Futures trading is NOT an exception to the rule.
Good luck to all.
