Interesting Volume Observation

D

ddefina

While following the chipmunks, I noticed volume spikes today are closely followed by reversals. Has anyone noticed this phenomenon in the past or is it just a coincidence? Not being a scalper it doesn't affect me, but might make for an interesting scalping system.
 

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I think of them as buying or selling climaxes. Yes I watch them and make use of them for short term direction. Often those surges mark a temporary resting spot for the trend as they exhaust the buyers or sellers for a few moments while they reload so to speak, or as you pointed out, on smaller time frames, reversals.

I don't just play them by themselves though, just for reference.
 
Definitely sometimes those are program spikes capturing a few ticks, but I would watch the eprem and prem for clues to when those programs go off, rather than just the straight volume. I do know some traders who use the eprem and volume together for a viable edge in their trading method.
 
Volume Surge (as I call it... we all have different names for different events) are just times to wach out for... most of the time the market has a minor retracement but some of the times the market bursts through from that point....

I'm very watchful with what happens from there...
 
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