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You are here: Home / Uncategorized / Reading Daily Price and Volume for Intraday Trading

Reading Daily Price and Volume for Intraday Trading

November 29, 2017 by DrGary 2 Comments

Reading Daily Price and Volume for Intraday Trading

Yesterday was a big day up.  The market rallied about 30 points (about $1,500 per contract).  How can we trade that?  Was it possible to know that such a move was likely.

We think so.  Perhaps not the exact measure, but a palpable sense that:

1) the market was about to move, and

2) the direction would be up.

Let’s see how we might have seen that.

Reading Daily Price and Volume

Reading Daily Price and Volume

On the daily chart, we see much of November was spent going sideways congestion.  Note during the first half of the month that each time the market dipped down towards the 2560 area it immediately rebounded to close off the lows, if not firm.  These several days of accumulation are marked with “B.”

On November 15th, the market dipped one last time and closed above the recent lows, then has a strong response on good volume (bar #1).  We get a classic test on bar #2, with another strong response to the test at bar #3 that pushes the market back up to the swing high (A), marked by the red dashed line.

We expect at least some hesitation as we come back to the recent highs.  The question always is: how does the market respond?  Is it showing weakness?  If we are long, we would obviously be concerned should supply be present at these highs.

The day after bar #3 closes down, but is unable to fall very far.  Note the volume recedes promptly on the pullback.  The next day shows buyers remain present as the market dips into the middle of bar #3 and it’s high volume, but finds no serious selling.  Whatever supply existed in the high volume of bar #3 is no longer present.  This is the meaning of the price action and volume of bar #4.  Bar #5 shows buyers eager to hold the highs around 2,595.  The higher low and higher high with a firm close coupled with an increase in volume show the telltale signs of eager buying against this higher support (A).

We see that whatever selling exists in the market, it is not having much of an impact on price.  We see accumulation, holding support, failure to fall lower, and clear evidence in the daily price and volume that buyers were entering the market whenever price fell a few points lower.  Testing, aggressive buying, and holding gains at the higher support all portend higher prices.  Since we are about to break from a congestion area or trading range, we could anticipate a strong move up and out of the consolidation.  And, that’s what happened.

Intraday Application

Tomorrow, we will look at the intraday trading for yesterday (November 28th) and see where sound trades set up and why they were choice setups in this market context.

Until then, you might want to check out our current sale.  We have 40% off all our video tutorials!*  This is the deepest discount sale we will offer all year, so if you would like to learn to read the markets in the straightforward manner we’ve done here, then you might be interested in this link to our offerings:

Video Tutorials on Sale: 40% off!

 

* Sale excludes Weis Wave and Deep Practice.

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Comments

  1. Andrew Harnaga says

    December 17, 2017 at 3:03 PM

    Hello Dr. Gary,

    At the start of paragraph 4 “The day after bar#4 closes down”, were you actually referring to bar #3?

    Thank you for posting! I hope you will consider to post additional charts with detailed analysis in the near future. It is a great educational component.

    Best regards,

    Andrew

    Reply
    • DrGary says

      December 18, 2017 at 10:52 AM

      Andrew,

      Good catch and its been corrected.

      Gary

      Reply

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