"Picking turns," eh?
The theory behind the classic Lane's Stochastic (plotting the percentage of a candle/window-of-time in which the asset trades at that candle's highest) is that as a slower (longer-period) moving average catches up with a faster (shorter-period) moving average, the market will be subject to change in buying/selling pressures. In particular, as the candle's trades group around >80%, the theory suggests buying fatigue follows, and as the trade's group <20%, selling fatigue will set in. (And when the Stochastic [of either length -- your choice] dips back below 80%, you sell, and when it climbs back above 20%, you buy.) Simple!
But whither the volume?? We only have price and volume to work with, and leaving one behind is *foolishly* data inefficient. So!
Enter the Money Flow Index -- basically a volume-weighted Stochastic -- including the same use triggers of 80% and 20%.
https://en.wikipedia.org/wiki/Money_flow_index
I plot both, and note divergences -- this has proven to be much more reliable than either one alone.
And to reflect back on the OP, it's fun to play, "Caught ya!" when you see 2x or 3x regular volume pile into a trade, driving price in one direction, and then see 3x or 4x the volume follow along over a larger period, riding the change in the other direction. For example, they wanted to buy 20k of something at a bargain, so they sold 100k in a rush, dropped the price by a good couple of dollars, and then quietly bought 120k back in the ensuing "recovery." Could that be different traders/houses? Sure. And even if it was the same house, it could be going to different funds within, regardless. But it's still Manipulation-Via-Size.
The theory behind the classic Lane's Stochastic (plotting the percentage of a candle/window-of-time in which the asset trades at that candle's highest) is that as a slower (longer-period) moving average catches up with a faster (shorter-period) moving average, the market will be subject to change in buying/selling pressures. In particular, as the candle's trades group around >80%, the theory suggests buying fatigue follows, and as the trade's group <20%, selling fatigue will set in. (And when the Stochastic [of either length -- your choice] dips back below 80%, you sell, and when it climbs back above 20%, you buy.) Simple!
But whither the volume?? We only have price and volume to work with, and leaving one behind is *foolishly* data inefficient. So!
Enter the Money Flow Index -- basically a volume-weighted Stochastic -- including the same use triggers of 80% and 20%.
https://en.wikipedia.org/wiki/Money_flow_index
I plot both, and note divergences -- this has proven to be much more reliable than either one alone.
And to reflect back on the OP, it's fun to play, "Caught ya!" when you see 2x or 3x regular volume pile into a trade, driving price in one direction, and then see 3x or 4x the volume follow along over a larger period, riding the change in the other direction. For example, they wanted to buy 20k of something at a bargain, so they sold 100k in a rush, dropped the price by a good couple of dollars, and then quietly bought 120k back in the ensuing "recovery." Could that be different traders/houses? Sure. And even if it was the same house, it could be going to different funds within, regardless. But it's still Manipulation-Via-Size.
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