Price/Volume Relationship

Quote from taowave:

LOL......Tai Chi is a martial art that should emphasise yeilding,neutralising and effortless power....

You want compassion,go study Anasura yoga:)
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Actually I study Aikido. Aikido teaches compassion for the enemy because there is only one Being and we are really fighting with ourself.
 
Quote from ProfLogic:

Slap, please clarify something for me. Isn't Divergence Price and an indicator (in the case of your pic, volume) suppose to move in opposite directions, diverging or converging, to create Divergence?

Seems in your pic that your two Price tops are making LL's and volume, at the bottom of your chart, which spikes "before" the Price tops, are making LL's as well. How is that Divergence?
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Don't look so much at the lines drawn but at the doubletop vs. volume - note on retest of highs, volume is much lighter right before it turns down... I will attempt to illuminate it with this pic.

It is a type of divergence because there was less volume on the retest, therefore less supply/demand conviction - yet the same price level was reached on about 1/2 the volume it took for the first time.

Admittedly, it may be a loose definition of "divergence" but semantics don't change the process happening there.

(see yellow circled areas on this new pic)

Regards,

Paul
 

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ProfLogic,

First of all, I want to thankyou for your help in your posts.
They are very good and informative.

Question???

I used to use "Omnitrader" as my trading platform. However, I
found over time that it did not have the capabilities that I
need. So I replaced "Omnitrader" with my data provider "E-Signal" charts. No charge to use their charts as they are my data provider.

However, I am in the market for a new charting program!

In your experiences with "Ensign" would you recommend the
program? What do you like about the program? Or...
knowing what you know... would you recommend another
program? You seem to be very "charting software" savy and I
wanted your opinion.

Once again thanks...for your opinions and help!!!

snarlyjack
 
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Quote from KPCURRENCY:

Maybe you should spend less time on trying to PREDICT price and more time on understanding WHY price moves the way it does.

The cause of all price movement is the result of imbalances of supply/demand, created by Professional operators.

With much thanks and no disrepect, I have attached the previous chart with the Volume Spread Analysis view.

1. Look at the pink two pronged arrow. Notice that this bar is very wide, and closes down vs the previous bar and closes on the lower half with ultra high volume. Many traders would see this as a weak bar. This is, however, a strong bar. If this bar was really weak, the close should be on the low. Moreover, if this was indeed a weak bar the next bar should be down, not up.

Strength appears on down bars. Professional money has entered and are buying on this bar into the 'herd' selling.

2. Move over to the first pink line. We see a narrow spread (range) bar that closes up from the previous bar, closes in the middle of its range and has volume that is less than the previous two bars. This is no demand. At this time the Smart Money is not interested in higher prices. While they did come in and buy two bars back, they are none the less not ready to mark the market up at this time. Thus, prices falls down slightly.

3. Next pink line. Here we have a 'test'. The bar makes a lower low, closes lower than the previous bar, closes on or near its high, and the volume is relatively low. At this time the Professional operators are checking, or testing, for sellers underneath and the low volume tells them that there are none. With no sellers (supply) in the market, prices are poised to rise.

Markets fall because of substantial selling (supply) by Professional money. Markets rise, however, not so much because of Professional demand (buying), but the lack of substanial selling (supply).

BTW this is why it is not good to paint volume red on down bars and green on up bars; it belies the actaul strength in some down bars and the true weakness in some up ones. A better choice is to paint volume green if it is greater than the previous bar and red if it is less. Since volume is activity, you immediately know if one bar has more activity than the next.
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Quote from slapshot:

Don't look so much at the lines drawn but at the doubletop vs. volume - note on retest of highs, volume is much lighter right before it turns down... I will attempt to illuminate it with this pic.

It is a type of divergence because there was less volume on the retest, therefore less supply/demand conviction - yet the same price level was reached on about 1/2 the volume it took for the first time.

Admittedly, it may be a loose definition of "divergence" but semantics don't change the process happening there.

(see yellow circled areas on this new pic)

Regards,

Paul
More...

Sorry, I'm a very objective and literal individual. Double tops don't exist unless they match, direction is direction and loose definitions don't exist in my trading environment but that is why everyone has they own style.
Good trading to you.
 
Quote from snarlyjack:

ProfLogic,

First of all, I want to thankyou for your help in your posts.
They are very good and informative.

Question???

I used to use "Omnitrader" as my trading platform. However, I
found over time that it did not have the capabilities that I
need. So I replaced "Omnitrader" with my data provider "E-Signal" charts. No charge to use their charts as they are my data provider.

However, I am in the market for a new charting program!

In your experiences with "Ensign" would you recommend the
program? What do you like about the program? Or...
knowing what you know... would you recommend another
program? You seem to be very "charting software" savy and I
wanted your opinion.

Once again thanks...for your opinions and help!!!

snarlyjack
More...

You are very welcome. Anything I can do to help . . . I will try.

If you watch a couple markets total, Ensign is a decent program. I myself use MultiCharts and and am absolutley pleased with it. I monitor and trade in 66 different markets and need complete clarity and accuracy. I find that in Multicharts. Ensign and MultiCharts are the only two charting Software programs out there that accurately build Volume (Contract or Share) Bars.
 
Quote from ProfLogic:

Sorry, I'm a very objective and literal individual. Double tops don't exist unless they match, direction is direction and loose definitions don't exist in my trading environment but that is why everyone has they own style.
Good trading to you.
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What you must have meant is that you are a very subjective individual - you obviously don't have that much objectivity if you are so rigid that you can't get past semantics to discuss the real point of the market action... which is never perfect and is always loosely formed.

Good trading to you as well - and good luck with all that intense hypercritical BS you overanalytical types subscribe to.

Too bad that you can't see the forest for the trees...
 
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