Hey...what about Volume?

Anemic volume today has cut off any bullish follow through from Friday's push higher. Thus the order flow balance remains

Nervously awaiting the "mid-week" reversal to see where to run my stop next week.

Update on AUD/USD - short:

Position has gone my way quickly and is currently 266 pips positive. I have a take profit set for 416 pips on 1/2 the position and will hold the remaining 1/2 until I see the daily chart exhaust.

USD/MXN - Long:

Peso on the other hand is still struggling with late selling even though there is climax level buying going on. Price has only been able to probe above recent attempts to go higher. There looks like a genuine battle going on here. Stop is as tight as I can make it for now.

Stalking Gold for a long:

Weekly and Daily coming together

Here is how I am seeing it. By the end of today's trading if I don't see an absorption signal, I will have to let this go, but I have placed a pending order near the low of today's price action.

Now just waiting for the absorption signal to complete...but volume may not signal as I want.

Hey all...is anyone benefiting from these posts? Or am I just talking to myself? I haven't seen any comments, or questions lately about this idea. This is supposed to be a two way street here...we exchange ideas. I've shown you mine...

why do you think people dont comment anymore ?

Perhaps it has been almost 10 days since anyone but me said anything... perhaps it is because I have posted 8 trades both closed and open based on my method of trading which I have freely expressed here and plainly invited comments and discussion... perhaps no one feels they have anything to contribute or they are simply uninterested.

How about you? Would you care to share anything?

I'll trade the dailies with you. I float in the 1 to 15min range but i have always wanted to take the daily chart more seriously. Get a Quarterly measurement going. When i have some time today, i'll look for up to 2 trades.

I'll add my 2 cents to the discussion.

Thanks friend...look forward to your comments...as a side note, most of this idea came from trading very small time frames in the futures market.

Hi Don,

Did I spot them right ? I noted them on cAlgo chart, and used cAlgo and MT4 labels for the specific behaviour...



1 – cAlgo: absorbtion of buyers clearly seen ( blue > magenta ); MT4: no absorbtion ( as per definition ) – blue << magenta, I think due to many transactions on magenta, but the real volume isn’t as significant as on the blue one.
2 – cAlgo: delta is a little raised on this candle comparing with the previous, showing hint of interest of buyers, even if it didn’t closed above high of previous, so some problems there; MT4: delta is lower comparing with previous, showing only lack of interest from sellers, but not buy commitment.
3 – cAlgo: delta is lower than previous, showing a not so strong commitment from buyers to break the resistance; MT4: delta is higher than previous, showing commitment from buyers, which wasn’t the case.
4 – cAlgo: delta is higher than previous, showing commitment from buyers to break; MT4: delta is sort of equal with previous, showing a so-and-so commitment.
3-4 – cAlgo: between 3 and 4, delta is rising, showing more buyers into the game; MT4: between 3 and 4, delta is declining, showing an exaustion in the buyers intentions.
5 – cAlgo: delta is a little higher than previous, showing more buyers are coming; MT4: delta is a little lower, showing only lack of sellers.
6 – cAlgo: yes, delta is higher than previous ( some buyer are coming ) but is lower than 5, showing that the buyers don’t dominate, there is only lack of sellers, so chances are that resistance above will not broke; MT4: delta goes through the roof, total domination of buyers – I think this is also due to many transactions, but not so much real volume.
7 – cAlgo: delta is higher than previous, indicating a yet-living climax – possible chance of another push; MT4: delta is lower than previous indicating exhaustion.
8 – cAlgo: delta higher than previous, showing absorbtion of sellers; MT4: delta continue to decrease, on a reversal in price – ambiguous sign.
9 – cAlgo: delta higher than previous bullish, and increasing from the other previous bearish, showing more sellers are coming – chances are the down move will continue; MT4: delta is lower than previous bullish, and decreasing from the previous bearish, showing some indecision. The next bearish bar have a big delta, but it’s a little too late for this correct info to come.
10 – cAlgo: delta is higher than previous, showing a possible beginning climax – buyers aflux; MT4: delta is lower than previous, showing only lack of sellers.

Hello Forexentric...wow, lots to cover, let me see if I can go one by one...let start with the monthly chart, #'s 1-4...BTW, I eliminated the MT4 platform from my system again...I much prefer cAlgo. But as you have already noted, the difference in calculation, as well as volume and quote info can lead to a big difference in decision making when the moment comes.

1) Correct buying absorption clearly visible not only from the stand point of volume delta, but also price reaction. a small 5 month range had occurred and this was the last of it. Any buying was quickly absorbed leaving selling to dominate.
2) I interpret this a little differently. you can prior to candle #2 that buyers we pooping out right at the highs of this area and that this continued over the next 5 months. All this while the buying remained fairly steady. Just not enough interest in buying above that area even though it probed up there a couple of times. This is a typical marker of a "stable" trend. Note how the actual volume dropped off, and then picked up again as price fell to the bottom of that range...then dropped off again..."stable" trend.
3) This was driven purely by shorts stopping out. Even though the buying is definitely dominant those buys are shorts getting out of their positions. The "not so strong" buying is usually shorts exiting...this is a very good heads up to find a buy when price retraces back to where the stops were first run...and that is indeed what happened.
4) Another range starting to form perhaps...the month ended on climax buying, so once the buyers are all in...who's left? Price will retrace back to find more buyers...this is where I took my counter trend trade short...

Now on to the weekly chart...
5) The "whoosh". Two weeks off selling positions stopping out creating climax level buying. This candle and the one before it confirmed a higher low, and took most sellers by surprise. The following candle while ending bearish was weak on low volume and any new sellers were again stopped out on the very next candle, creating another "whoosh" but with less sellers...less volume.
6) The final "whoosh"...most of this buying is all shorts stopping out...BTW... this occurred simultaneous to #3 (noted on the monthly chart). Same price reaction, different view point. The larger chart gives a perspective that while this buying is mostly stops, there is buying dominance developing.
7) The stop run has finally pooped out. Again, monthly candle (noted in #3). Note how VSA analysis painted the candle Green indicating climax, but the delta is only mildly pushing above the exhaustion zone...No one is left to buy, all this buying as been shorts liquidating...so price is bound to fall.
8) Exactly right...selling was absorbed and the late buyer (the retail buyer), has come in thinking he/she missed the buying and has absorbed the mild selling...BUT...price only barely makes a higher high and cannot close above the previous high...Note how the selling delta peaks right as price pushes base the low of this candle...another "whoosh". This is the late seller liquidating and scratching his/her head wondering why their trend following system (on an intraday chart) didn't work.
9) Analysis correct again...very well done. I would only add that these sellers are very likely new sellers picking up and absorbing the last round of late buyers....climax volume selling.
10) Market drift...note the date...two weeks before Xmas...no one really trading, this is just retail trading and/or end of month settling before the holidays.

I think you did an outstanding job of analyzing the delta, and would only add that one also needs to keep in mind the underlying order flow and market mechanics to use this kind of delta...it is an extrapolation and thus not exactly what I would want, but using larger charts that incorporate entire 24 hr days, weeks, and months, I believe these conclusions can lead to well informed decision making.

Watching WTI for a long

Price has fallen down into my target zone and bounced on climax selling volume. I will now watch the daily chart intently for exhaustion and absorption.

Hi Don,

Thanks a lot for feedback! Useful !
One more question: which is your broker ? ( That one with cTrader platform, I think ... )
I would like to give it a try ... on demo first ...

Still here, just need to run some calcs for stop placement as such.

It is Pepperstone in Australia: https://pepperstone.com/en/

Hi DonPato,
Thanks for the thread!

Here is a little example, a 5 pips scalping for EG: price ranging on the top, but volume shown more buying, so jump in..

LTZ

Looks like you hit the nail on the head with that trade...and might have even held it longer.

Looking at this from my charting perspective:

(sorry for the bad drawing)...as soon as the range started looking "stable" I would've been hammering the tops and bottoms of this range. Looking at where you entered (last two green candles on this chart) showed the seller's finally stopping out and would've given the opportunity to hold into the break, but assuming you where after a small goal (like I do when I day trade), this worked out well...Congrats.

Yes, exited early, just saw your thread, and took several minutes to analyse the chart, seldom trade this pair, so happy with green pips

Hello again friends...I want to thank those of you who have taken the time to respond and keep this thread alive. I put out posts but often I feel like I'm just talking to myself. I see that people are reading the thread but when weeks go by with no response I often wonder if it makes sense to continue. But when I see that several of you have grasped this idea and are trying it out with positive results I am grateful that you understand (or at least seem to) the market structure concept of using volume in your trading. Tick volume (while different) is not useless, and when used in conjunction with the rest of the market structure, order flow, and time I believe consistent winning results are just around the corner.

For me (using futures) this realization is what flipped the switch from consistent loser, to consisten winner. Now that I might be able to bring that to forex, I feel that, in addition to day trading for consistent income, using the volatility of the forex market for building savings is a viable and useful endeavor.

Hi Don,

I noticed a couple of times a "volume pattern" which happen sometimes: an absorbtion which happens in two candles not in one candle. An example is in the chartshot you posted - first pivot signaled by you - where the pivot candle is at a very low volume, and the next one has an increased volume. These two candles can give an image of sellers absorbtion - if i make a single candle from these two, the result is kind of pinbar, and the volume is rising toward the end of pinbar.

Do you use also patterns of multiple candles like this ?

And thank you, once again, for this thread. It's a good one!