Showing posts with label price and volume. Show all posts
Showing posts with label price and volume. Show all posts

Jun 15, 2007

Volume at key areas

One thing I've been really focused on the last two days - almost like I rediscovered this - is the relationship between price and volume at key areas of support or resistance. Say I'm in a trade and I enter short above the OR low, which I often do, and price moves towards the OR low and I start seeing some weakness. Sometimes my reaction is 'Get the f out... the sky is falling... abort, abort, abort!!!" However, now I look to see if there's an increase in volume at the key area (say the OR low) and if there's a bullish candle that forms soon afterwards. The screenshot below of ADSK from yesterday shows a good example of what I'm talking about:

  • Red arrow shows increase in volume at the OR low
  • The candles following this increase are not bullish and that's a signal for me to stay with the trade until I get a bullish formation
  • Price continues to drop downward, hit the fib. ext where I sell and realize I fumbled as price dropped even further





















Here is a short from the other day (AA) where price fell to the OR low, volume increased and a bullish candle formed afterward. I did get out... and save myself a lot of losses. I probably should've reversed my position at that point.


  • Red arrow shows increase in volume near OR low (support)
  • Very bullish candle formed afterwards which was above the 5ema and then price took out that high