Price and Volume

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No, from Wyckoff, and I guess anybody else who studies PV. The longer the bar, the less agreement on fair value, the more searching to be done, the more likely an entry is a shot in the dark. Instead, you wait for the bars to narrow, after which price will have a directed move of some sort and not just drift.
 
Consider everything that appears on the tape as an evidence of support and lifting power, or pressure and selling power. Continually compare the strength of these forces. Use all the judgment and reasoning power at your command. Endeavor to improve your judgment by constant study and practice. Strive to lift your judgment from commonplace to good; from good to better; from better to excellent.

-- Richard Wyckoff
 
. . . you must always be on the lookout for a change in [the] immediate trend. It is likely to change its direction from one to three times in a single session. This is how you detect the change: In an up trend, when the selling waves begin to increase in time and distances or the buying waves shorten. Either or both will be an indication of a change in the immediate trend. Apply the same reasoning to a down trend. Watch closely for these changes for they tell you when to buy and sell; when to get long or short; when to close your present trade and reverse your position.

-- Richard Wyckoff
 
Quote from amg:

Today, vol on the ES up close bars gave the trend away, no doubt. Even so, I found it difficult to focus on staying with it because the stairsteps (great description for today) were, on the whole, small. Also, for me anyway, I never "felt" a sense of strong momentum, it was almost creeping up. That pace is also what stopped me from shorting, lol. This is looking at 3m and 15m charts.

Part of my bias, in looking back, was the 45m chart showed diminishing volume on this recent rise, despite buyers seeming to be in control of the 3m, and to a somewhat lesser extent, the 15m. Mind you, 45m may be too large a time screen and perhaps I shouldn't go beyond a 15m chart for day-trades. Nevertheless, as a result, I brought into my mind an overly cautious outlook, which clouded my interpretation the actual price action in the intraday timeframe I was trying to trade.

I noticed you brought in a Daily marker to your chart. I'll often put in my own markers (such as gaps) off a higher time frame. I suppose there are *some* things from the bigger picture that add value, so perhaps it's somewhat subjective. I'm certainly open to ideas!
More...

As time goes by and you get used to this, you'll find yourself sloughing off what's extraneous and getting closer and closer to what matters. Unfortunately, you're going to have to decide for yourself what's extraneous to you.

Focusing on price and volume doesn't mean analyzing every single bar pair. Nor does it mean obsessing over the volume trend. A lot of people, for example, think that volume has to be consistently rising in an uptrend, but as I pointed out in Demand/Supply, that's not the case. As long as price is rising, the demand/supply equation is working in your favor, regardless of what the volume is doing. It's only when you begin to see shorter bars and longer tails and little TL breaks that you need to become concerned. And if volume doesn't come in accompanied by a higher price, then you may have a problem. If volume does come in and price just sits there, then you're looking at distribution, and you may want to say bye.

Therefore, volume was, in a sense, today irrelevant. What mattered was where we began, at the PDH. Then that we stayed there. Then the volume rolled in, resulting in dojis and a big honking shooting star (the blended bar), all signs of trouble.

But then volume came back even stronger, resulting in a hammer. We tapped our feet for a while, creating another hammer in the meantime, then, 40m later, up pops a marubozu. And that, given where we were, is the charting equivalent of a cannon. When price comes back on light volume, stays in the upper half of the marubozu, and no selling pressure is to be found anywhere, there should be no equivocating about what to do. Anything else is really just distraction.

Perhaps the best advice I can give to you is that, when you're doing your daily trade analysis, think about what helped you make the right decisions and what was of little or no help at all. If instead you made bad decisions, what were the enablers? And if they're enablers, why do you have them?

As for the "daily marker", I only mention it if it looks like it will be important. I've posted daily charts of the NQ showing the demand/supply lines and the "channel" they form. Unless you're approaching one end or the other, they're not particularly relevant except to note price's position in them. As for the gap, I actually didn't pay any attention to it until I saw price stall, and I looked back before the previous day to see if there was some important congestion zone somewhere. The gap seemed a likely suspect, though it really didn't matter what it was since the price never closed below the LSL.

As for an elaborate chart display, I've never had the need to actually see a variety of bar intervals. Therefore, I have 1m, 5m, and daily (which I consult only pre-market). If I need to see today in a context, I'll zoom out, but I don't need to see individual bars, just S/R and the "wave".
 
You point out on today's chart the double top
and then note, no volume. In a general sense,
does this situation mean the probability of a
reverse, or an end to the up move is good?
And if so, can the same be said of a
double bottom? I'm thinking the meaning
behind the volume being less the second time
is the energy needed to push it beyond
this point is not there, so be aware of that.
And I would think, especially if like on the ES,
this is happening at a pivot (or some other R).
is this close :)

thanks,
jd
 
Figuratively speaking, . . . the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.

--Richard Wyckoff
 
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