Hey...what about Volume?

Hey I have been through your threads and can we have a conversation to make the thread active, is this an example of absorption this is silver on the 45 min I posted two pictures,your example accompanied with mine and can you spot exhaustion I'm having a hard time finding. Thanks for blessing us with your information and thanks for the thread.

Here is another example on the 4hr silver

If I understand you correctly, you are asking if your 15 and 4 hr charts are showing the same thing I highlighted on this chart. I am unable to tell for a couple of different reasons:

1. It appears you have Heiken Ashi candle sticks on your chart, which completely obliterate the price movements during any time period you have. These candles were created to show trends, and as the market we are currently looking was ranging, I don't think they are helpful...in fact I really don't think any trend indicator is very helpful...so I am unable to see what you are referring to when you say the "silver" If you mean the doji? Again, with Heiken Ashi, any price action signal is not truly what you think it is.

This 15 min screen shot shows no doji and in fact shows (on this very small time frame) that volume just pooped out at the top. Which is typical of ranges.

 

1. it appears you are trying to use volume as a divergence tool to find entry points. I think is an especially unhelpful way of determining absorption. Especially on forex intraday time frames. I have mentioned this ad nauseaum here on this thread but it bears mentioning again. Intraday tick volume is not especially useful on intraday time frames. This is because it waxes and wanes between major sessions and can lead to just the kind of thing you are pointing to. Just because the volume is declining intraday does not mean order flow is exhausting...it means that people are leaving the market or waiting until the next session to participate.
2. Remember we are talking about TICK volume (as it is the only volume data we have in forex) and this is NOT measuring the size of participation, only the number of transactions. Thus upticks or downticks in volume especially intraday are meaningless in regards to extrapolating order flow.

This is why I (just me apparently) advocate using DAY charts or bigger because you have the entire day'a tick volume and can then extrapolate order flow and volume delta from that. Look at the charts you posted especially the 4 hr chart. You will see "waves" of tick volume moving higher and lower at the open and close of each day...look further in to the 15 min chart and see the volume drop to almost nothing at the end of the day...normal...natural.

We cannot derive any meaning from these readings because that is what always happens every day and so any "divergence" is a false signal or just NO signal at all. Normally I look to see (ON A DAILY CHART) price close well off the highs of candle (for a sell signal) on RISING tick volume. But ONLY after I have first seen, a completed Climax, and Exhaustion phase. I take no action until I see all three phases complete. They don't always occur in that order but often they do and when that happens, they are usually the best signal.

Edit: As a side note I have discontinued using Oanda as my date provider. Among other things the way they have divided up the day and week also creates signals where none should be...and this chart is from that period where I was researching this very issue. Here is a screen shot of that same area with my current data provider...

As you can see here the climax, exhaustion and absorption phases are far more obvious

Oh Thanks for the clarification, I'm still studying your methods and about the Forex Intraday comment you are right your mentor gspajon mentioned the same about Forex volume not being significant on the lower time frames as i was learning about Balanced and Unbalanced methods. Do you think your methods are applicable in other markets besides futures and forex, for example stocks and crypto markets concerning volume disparities such as OTC (over the counter trades) and dark pools ? Thanks for the reply it means so much

You know gspajon? I haven't heard from him in a very long time. I know he's no longer posting here on FF...got tired of being bullied just for trying to help out. If you speak with him tell please convey my best wishes.

I'm glad you mentioned balance and unbalanced order flow...while it is NOT the discussion here, and I'm sure gspajon will disagree with me, I have found that using these phases, (Climax, Exhaustion, Absorption) helps avoid "fliers" when setting order on a retest of a balance zone. I have often been "burned" when I just set an order near a balance zone, and then watch as price crashes through that area with out so much as a pause. But when I see price approaching a "retest" area or a balance zone area, I wait to see these phases complete before I set order out. This has saved my bacon on more than one occasion. Meaning the less I lose, the more I keep, even if it means I miss the "primo" entry. I have used this to improve my win/loss ratio, which for me has proven quite profitable.

This "theory of exhaustion" can work any market that is "zero sum" where you have reliable data. I use it to trade futures, and commodities as well as FX. I imagine stocks would also work but that is NOT a zero sum market like forex, futures, and commodities...

I don't personally know him I was just going through his threads, Was awful how he got treated. Is this your main method of trading with these three phases ? or do you have any other methods to add confluence to your trades ?

I have found that the use of volume/delta has been the missing piece to my trading. It took me a great while to understand and be able to "see" order flow but since then I was only wanting to find a way to be more precise about transacting, both entering and exiting.

When he was mentoring me he told me not to waste my time with it or go over to futures and use the heck out of it...which is what I did, but still in the back of my mind I figured since these markets all work the same way, it should be possible to find something that can at least "filter" my transactions so that I can take advantage of all fundamental aspects of the market...

Again we here are concentrating on volume as it pertains to FX, but I do utilize my ability to "see" order flow and then filter that through the lens of volume delta and have found it has been very accurate (at least compared to how I used to do).

I will leave you with this screen shot of EUR/JPY...market has yet to open but I have placed my order to see if it will fill.

In case your wondering about that last daily candle...yes it is on declining tick volume...but I'm looking at a range, and it would appear that volume is pooping out again at the top of this range...so if I'm wrong, I'll know quickly, I think.

Hey I was going through your other thread "Price-Structure-Order flow" I wanted to grasp order flow before I got into volume, do you consider these actions balanced I just wanted to clarify ?

Not to get too deeply in the weeds...I still have that thread on my radar and can answer any more specific questions about order flow and its "foot print" there. But I have modified your areas with boxes indicating where the balance areas are...and drawn a big red "X" through your middle box...that is NOT an balance area.

Saw this trade opportunity on a demo account I saw the candle pooped below range on low volume in an oversold area (I use to determine climax) and it worked well. Thoughts ?

I have the pictures backwards the 1st pic was meant to show first and showing the entry then the results below. Sorry

Blew past Take Profit Zone

Another set up I'm not to confident in but will see how it will play out, (sorry if i'm spamming)

First...well done! This looks very similar to the open I just had on YM. I am very unfamiliar with trading price/volume areas (your histogram at the right). However I do see what I would interpret as at least two of the phases, and completely understand why you targeted the area you did...I feel I would've done the same.

I traded the other way on YM this morning. Right at the open. This was a difficult call and frankly I thought it was going to lose but sometimes even a blind dog will find a bone.

Thanks for your in insight, I'm still learning. Here is an update to the other chart I posted. It seems to be forming a balance zone and I think it will break upwards.

It would appear this chart is trying to push down another leg, and making lower lows and lower highs along the way. While there is always the chance for a move to a new high, I would be biased for a short as follows:

Of course multiple time frames would help tremendously and I would imagine (not knowing which market you are trading), that a lower time frame would show these exhaustion phases more clearly as you "stalk" your entry

Tick data can be considered as reaction of LP to orders coming. It buys and sells so increasing tick data means more orders are coming and vice versa. I also see this as measure of risk of entering into the market. But this is regarding forex tick data. Futures volume is even more informative since it shows true number of orders which come on the exchange (not considering splitting, mixing or other techniques of hiding intention from big players) and putting it together will technical interpretations (like breaking S/R lines, consolidations, comparing intraday data) we can derive from this some interesting info which can increase our confidence in technical analysis.

It did break down the balance zone, and went up and is almost at my target but i couldn't see an exhaustion can you identify it on this chart ?

I'm afraid that I cannot from this screen shot. I don't know what market nor do I have my usual tools. I see it is 30 min chart an it would appear that end of day volume is dropping off...is this tick volume or actual volume. If is actual volume I suggest you study the delta ratios.