The schemes and examples provided above are pertaining to the trend situation – strict direction in the market. We will now consider volumes work in the change zone or trend suspension Second rule.TENDENCY continues until IT does not show apparent signs of breaking point.There are, as minimum, three stages, three steps in the market movement development, which signal about that the existing tendency has suspended as minimum and has changed as maximum: broke. First step.Intraday volumes fix unusually large indicators at a point opposite to the market movement: at the bottom, should the tendency have been bearish, at the top, should the tendency was bullish. (If average values for intra-trend movement at S&P500 are about 20 000-30 000 lots per day, then values considerably exceeding those in marked points are the first signal to suspend the existing movement) Second step. Some «platform» for a potential turn is formed, when the aggregate indicators of volumes for the whole period of the market’s horizontal movement must be comparable by size with volume indicators at the beginning of trend.
Third step. If the tendency has actually changed, there must be the last confirmative moment of tendency breaking: the nearest significant level of maximal volumes positioned as resistance must be broken and transformed into support by a local volume.
You may visually see the given mechanism on the scheme:
The given mechanism functions within different time periods. The schemed would remain the same, should it be an intraday turn only or a global tendency change. Only volume indicators values needed to stop and reverse the tendency differ. And should about 50 000 lots be enough for local intraday reversal at S&P, then a volume from150 000 lots would be needed for more significant (weekly or intra-month) reversal.
Third rule.The rule оf correspondence (divergence), growth (drop) of volume indicators to arising (extinction) of the tendency existing at a given moment, i.e.: a volume must confirm the market movement direction.
§VOLUME-ACTION PRIORITY We have three options with regard to making a decision, taking an action on the market: buying, selling and inaction. First rule:should you decide to act, the selection of a priority is determined by the tendency being medium-term as minimum (1-3 months) and existing in the market at a given moment.
And if you speculate even within a day (on the chart of 13.11. 08), always remember and better keep before your eyes a chart with a long-term tendency (see the chart below). Account maximal volume levels determined for a long-term period. Intraday buying in the given example (13.11.08) IS NECESSARY to fix at 903/906 level being the level of significant volume indicators for a longer period.
Second rule: the shorter a time period in which correction develops (anti-trend) you have decided to use, the more risky it is for you. (We used in the above example the speculation against the middle-term trend, which provided us with time and price option to realize a dealing). In the case of speculation against a daily trend, time and price provision is less and accordingly, risk is considerably higher.
Levels indicated on the picture will be important for Monday. We will enter the market from them and 963-966. Short positions are in priority, as these are largest prices of current contract.
Current (DEC09) contract has started a week ago and already S.O.T. index reports from Dollar Index tell us that during last week largest part of positions on the market was made by Biggest Dogs. That is confirmation for us for a good move on a Gold market next week.
On Friday after employment news oil market was quite volatile, and till the end of trading session it hasn`t formed levels from large volumes that would be good for entering on Monday:
Levels stand too far from each other, that makes no sence in entering from them.
On Monday we will wait for new volume accumulations.
Anyway, on the picture you see price "corridor" under which will be "short positions zone" and above- "long positions zone".
I won`t look for any long positions as market is now at the highest prices of Sep09 contract. More probably that market will form a platform of volume on Monday, it will move only on Tuesday.
Anyway on the picture you may see levels from which market may decline.
Analysts assure that now the trend in the gold market is absent — metal trades in back trend As the reason, containing growth, is called oversolding of gold concerning other metals. At the same time as basic "locomotive" for a rise in prices of gold we see dynamics of prices of currencies, the American dollar, showing the declining tendency already for few months.
The new Gold futures contract (DEC09) is already trading for 2 weeks.
Maximum levels for the last 2 weeks will be key levels for market movement in forthcoming week, it is 963 and 966 that at present is top, and has been worked off on Thursday, and also 958-959 and 947-948 that are main prices of this week. Short positions are in a priority. On the pictures below you may see main prices and volume counters, showing max volumes of 2 previous weeks:
Also to your attention a situation on the Dollar Index, under the reporting of traders from CBOT, as you can see activity splash is kept for 2 weeks that in the following week should lead to break of the channel and good price movement both at the Dollar Index and on Gold market.
S&P 500 analysis
Globally American indexes, and including S&P 500 have grown despite a series of the negative macroeconomic data which was shown. Anyhow, but index Dow Jones has increased by 0,39 percent to 9398, hi-tech Nasdaq has added 0,53 percent to 2009,35, and S&P 500 has become stronger for 0,69 percent to 1013, but on Friday there was a small correction then the market was closed above Friday low.
On the picture below you may see main levels of Friday from which market will trade on Monday:
Just wanted to say thankyou for you informative thread. Really enjoying your approach to trading. I have a couple of questions. When a contract becomes available to the market do you tend to sit on the sidelines until the big players establish a base level for volumes.i.e Contract begins Sept 01 do you begin trading that particular contract in its early days and if so do you use the volume high of the previous contract period to establish the corridor. Secondly how do i get hold of the demo volfix platform that you use ?
I enjoy reading your posts but could I ask you to write a post with some specific trade entry and trade exit rules. Along with some charts with notes on them. I think this would help everyone get a better understanding.
