Wednesday, July 08, 2009

A Look at a Transition Turnaround


Here we see the transition bottoming pattern mentioned in the Twitter comments intraday. The high volume decline was followed by a nice bounce and then a lower price low in ES that occurred on lower volume (and lower volume at bid) and non-confirmations from NASDAQ and Russell indexes. Those were followed by a significant surge in buying, taking us back above the day's VWAP. It's a key pattern to watch for on different time frames.
.

5 comments:

nospam said...

Brett, thanks for the daily feed of golden nuggets. Just wondering other than market delta software, are you aware of any other charting packages that provide volume transacted at bid vs ask?

Jorge said...

Nospam:

NinjaTrader does.

Best trading,

Jorge

Surly said...

Thanks again for these helpful posts. Your post yesterday was great.

My question is how to account for the variations in intra-day volume. the second test of the lows was accompanied by lower volume but it was a mid-day trade volume being compared to morning (generally higher) trade volume. I know you've mentioned your indicator that tracks average volume at specific time intervals during the day. Other than that, do you have any rules of thumb for spotting genuinely lower volume that takes into account these variations in intra-day volume?

thanks again!

Surly

Dean said...

I use a custom coded indicator for NinjaTrader also. Almost of my main discretionary setups right now are based on the patterns outlined here are other posts - i.e. market reversals (both long and short).

Dean said...

Surly,

I think the trick is a relative volume spike and also looking at the volume traded at bid and ask. For me, I typically look for volume spikes at price high/low, relative to surrounding bars and then looking for confirmation or divergence based on the bid/ask volume numbers.