Volume analysis – The Key to the Truth

[Petar Jacimovic]

Hello traders,
Let's speak about the Volume spread analysis.
Simply stated, spread analysis pays attention to the spread of the bar (range of the bar), volume and where the bar closed. These three things are very important.

Lets observe today example on GBP/USD FX and Futures market (1M timeframe). I marked letters on chart and will post explanation here >

a - Buying climax (volume spike). Bullish wide spread bar but with closing well of the high. Market don't like wide spread bars in an ultra high volume. The specialist will look to short in these situations. Anyway, we need more clues for positions.

b - Very next bar was a bearish bar in a high volume. So, if there is real buying power how the very next bar can be a bearish ? Of course, the smart money sold into public buying. Supply came in...

c - Classic no demand bar in a very low volume. Final confirmation that there is no professional money on the buying side, which means that can be only sellers.

Volume spread analysis or just spread analysis is all about smart observation and gathering clues to build the smart view.

Petar

 

[Petar Jacimovic]

Another example on EUR/NZD 30M timeframe >

a - Reversal up - thrust bar (demand overcame supply) - sign of strength

b - Strength came in (a bearish wide spread bar but closed near the top). This must be that buyers overcame demand. Notice the high volume on this bar.

c - healthy demand bar just after strength came in. This is confirmation that buyers are in control and that we may expect a higher price.

I also marked that all these actions happened near the support cluster.

Petar

 

[Petar Jacimovic]

Previous charts are just examples of analysis but I usually trade after the big events (news). I like to read large liquidity and I avoid to trade low liquidity markets. Why ? Because low liquidity means easier manipulation by markets makers. Also, low liquidity means no professional money involved into the market. So, I avoid trading when there are no big events on the schedule.

Anyway, I will post examples and explanation to explain you logic of thinking.

Petar

 

[Petar Jacimovic]

Another example on EUR/NZD 30M timeframe >

a - Reversal up - thrust bar (demand overcame supply) - sign of strength

b - Strength came in (a bearish wide spread bar but closed near the top). This must be that buyers overcame demand. Notice the high volume on this bar.

c - healthy demand bar just after strength came in. This is confirmation that buyers are in control and that we may expect a higher price.

I also marked that all these actions happened near the support cluster.

Petar

And this is what happened

 

[Petar Jacimovic]

Interesting combine those two analysis together, I would love to know more about it.

Volume analysis in combination with the chart patterns is very powerful. I will show you USD/JPY setup I posted on another forum before I registered here and so far is working very good and is still active. The point is to use volume spread analysis like the filter for patterns, to avoid fake patterns.

I am posting you 2 charts (FX chart and Futures market chart same instrument).
Futures markets got an inverse quotation, so Head and Shoulders formation on Futures market are inverted HSS on Forex.

Notice decreasing volume in an upward leg on the futures market. Decreasing volume on upward movement represents a lack of smart money involved in that movement and potential reverse soon or later. Once I spotted clear HSS formation I marked neckline and watched creation and breakout. I saw few UP - thrust bars in creation, which is the sign that pattern is valid and we need breakout but even more important (testing of neckline). Once I saw a successful test in a low volume of the neckline and narrow spread of the bar on that, I knew it will be beauty setup.

Setup is still active and potential target is set at 111.80

As you can see, patterns with volume analysis are very powerful.

Will post more examples

Best Regards

 

[Petar Jacimovic]

Today evening we got news, which can bring us strong liquidity >

RBNZ Financial Stability Report
RBNZ Gov Wheeler Speaks

I will watch speak since it can bring us potential liquidity, If not then I am waiting tomorrow Manufacturing Production m/m

Best Regards,
Petar

 

[be-positive]

interesting thread petar------ just curious as an example would your method be short 5min gpb/usd yet ???

 

[Petar Jacimovic]

interesting thread petar------ just curious as an example would your method be short 5min gpb/usd yet ???

Hello there and welcome to the thread

On the GBP/USD, we got very choppy market today and low liquidity. Probably smart money awaiting Manufacturing Production m/m. This news can bring us liquidity so I will carefully watch price action tomorrow. Again, when i daytrade i trade after the high impact news and observe price action and volume. If I do trade regular market there must be some chart pattern together with volume.

Best Regards,
Petar

 

[Petar Jacimovic]

Hello traders,
Nothing important happened on RBNZ Gov Wheeler Speaks and Manufacturing Production m/m, very low liquidity on this news so I am waiting today Crude Oil Inventories for potential action.

Anyway, while I am waiting for news,I found a very solid pattern and I like volume action in the creation of the pattern.

I found inverted head and shoulders formation according to the 15M time frame. I am posting you SpotFX gold chart and Futures market chart. Notice the volume on the right shoulder of the pattern (diminishing volume). This is a good sign for me that this is a valid pattern and that is worth buying position (0.5% risk). Another good confirmation of pattern is a successful breakout of the neckline and successful test of that same. I will try to take 1:3 RRR. TP around the price of $1,287.00.

If you like my analysis don't be afraid to comment

Petar

 

[Petar Jacimovic]

Hello traders,
Nothing important happened on RBNZ Gov Wheeler Speaks and Manufacturing Production m/m, very low liquidity on this news so I am waiting today Crude Oil Inventories for potential action.

Anyway, while I am waiting for news,I found a very solid pattern and I like volume action in the creation of the pattern.

I found inverted head and shoulders formation according to the 15M time frame. I am posting you SpotFX gold chart and Futures market chart. Notice the volume on the right shoulder of the pattern (diminishing volume). This is a good sign for me that this is a valid pattern and that is worth buying position (0.5% risk). Another good confirmation of pattern is a successful breakout of the neckline and successful test of that same. I will try to take 1:3 RRR. TP around the price of $1,287.00.

If you like my analysis don't be afraid to comment

Petar

Hello traders,
I took the lose 0.5% on the gold. Anyway, I am awaiting news for GBP today for potential setup >

BOE Inflation Report
GBPMPC Official Bank Rate Votes
GBPMonetary Policy Summary
GBPOfficial Bank Rate
BOE Gov Carney Speaks

In the next 2 hours, I am expecting large volatility on GBP pairs. Hope I will find good setup

Best Regards,
Petar

 

[Petar Jacimovic]

Sold the GBP/USD at the price of 1.4460. I rly. like price action after the news. I saw strong volume spike (buying climax) and later on few up-thrust bars. I see no upward pressure from professional money, which means that they are selling.

I marked letters on the chart and will go through explanation >

a - Massive volume spike (buying climax). Wide spread of the bar in an ultra high volume. Notice the close. Bar closed well of the high, which is a strong sign of weakness. If there is strong buying from professionals, the bar should close well of the high.

b - Up-thrust on the highest price. Supply overcame demand (another sign of weakness)

c - the Narrow spread of the bar in a low volume. Classic no demand bar or no buying pressure

d - Another Up-thrust bar in a high volume. Supply overcame demand.

Due to major weakness (buying climax) in the background my advice is to watch for selling on the weakness.

My fixed target is at the price of 1.4315. Of course, I may decide to exit manually depend on of the price action.

If you like my analysis, feel free to comment...

Best Regards,
Petar

 

[Petar Jacimovic]

Sold again at 1.4515. Again, buying climax and later on weak demand. The risk was about 15 pips and I am going for 80 pips target.

Best Regards,
Petar

 

[be-positive]

Sold again at 1.4515. Again, buying climax and later on weak demand. The risk was about 15 pips and I am going for 80 pips target.

Best Regards,
Petar

petar, you will have to make your calls if you are going to make them lets say within a couple of mins of when taken ---- sorry my friend but hours after the event( as in your last example chart) is just a waste of time

 

[malaguti]

petar, you will have to make your calls if you are going to make them lets say within a couple of mins of when taken ---- sorry my friend but hours after the event( as in your last example chart) is just a waste of time

you're potentially saying these could just be well picked examples...that hadn't actually crossed my mind but now that you say it yes its quite possible

 

[Petar Jacimovic]

petar, you will have to make your calls if you are going to make them lets say within a couple of mins of when taken ---- sorry my friend but hours after the event( as in your last example chart) is just a waste of time

Hello there,
I posted 10 minutes after I took a position. You still got time to enter and you could take good pips there. Also, I don't give signals, I post my ideas and my thinking on specific pairs. I am a fullltime trader and I manage money so that is the priority. Anyway, I do my best to post as fast I can. I use 1M time frame usually when I pick setups so the setups will have delay, its impossible to post in the same minute when i take position.

I took on this selling 1:3 RRR or 1.5% return on the account. :clap:

Best Regards,
Petar

 

[Petar Jacimovic]

Hello traders,
I bought GBP/USD at the price of 1.4366. I marked letters on the chart >

a - Volume spike (stopping volume). Wide spread bar in a ultra high volume, which closed in the middle. This is major sign of strength today. How the bar can close in the middle if there is a strong selling pressure. It must be that smart money bought into public selling.

b - Another high volume down bar but closed in the middle.

c - Tesing of supply in a high volume. Again, bar closed near the top.

Now, when we did volume analysis, we must find where this action happened. It happened around strong support cluster, which gives more value to our volume analysis.

Will try to take 1:3 RRR. TP around 1.4500

If you like analysis, feel free to comment >

Petar

 

[Petar Jacimovic]

Hello traders,
I bought GBP/USD at the price of 1.4366. I marked letters on the chart >

a - Volume spike (stopping volume). Wide spread bar in a ultra high volume, which closed in the middle. This is major sign of strength today. How the bar can close in the middle if there is a strong selling pressure. It must be that smart money bought into public selling.

b - Another high volume down bar but closed in the middle.

c - Tesing of supply in a high volume. Again, bar closed near the top.

Now, when we did volume analysis, we must find where this action happened. It happened around strong support cluster, which gives more value to our volume analysis.

Will try to take 1:3 RRR. TP around 1.4500

If you like analysis, feel free to comment >

Petar

Not bad so far +45 pips Will try to take 140 pips or 1:4 RRR in this setup.

Best Regards,
Petar

 

[Petar Jacimovic]

Not bad so far +45 pips Will try to take 140 pips or 1:4 RRR in this setup.

Best Regards,
Petar

Hello traders,
I took +122 pips or 1:4 RRR (+2.2% on the account). It was very nice trade and i am awaiting new opportunities.

Petar

 

[Petar Jacimovic]

I did analysis on AUD/USD and I found solid setup there.I will post AUD/USDFX chart and futures chart. I marked letters on the chart and will go through explanation now >


a - Massive volume spike and wide spread of the bar, a classic buying climax. This buying climax happened because of RBA meeting minutes. The bar closed near the top, which was a sign that we may see another trying upward before sellers come in. Anyway, definitely a major sign of weakness, because the market doesn't like wide spread bars in an ultra high volume.

b - Another wide spread bar with high volume. I saw no buying pressure after this demand, I saw that this action caused the market to go sideways for a while.

c - a Successful test of resistance cluster and Up-thrust bar in a high volume. Up-thrust = supply overcoming demand.

c - Doji (Up-thrust). Another sign of weakness and another successful test of the cluster.

e and f - Narrow spread of the bar in a low volume. Classics no demand bars. Since we got massive sign of weakness in the background, no demand bars are very good setup trigers.

I also found trading range and classic signs of distribution phase by Wyckoff analysis. We got buying climax , which stopped price from going higher, automatic rally, ice, Up thrust, sign fo weakness.

Will try to take 1:3 RRR at least. Risk is around 30 pips. Targets set at 0.7200 - 0.7130.

Best Regards,
Petar

 

[Petar Jacimovic]

I did analysis on AUD/USD and I found solid setup there.I will post AUD/USDFX chart and futures chart. I marked letters on the chart and will go through explanation now >


a - Massive volume spike and wide spread of the bar, a classic buying climax. This buying climax happened because of RBA meeting minutes. The bar closed near the top, which was a sign that we may see another trying upward before sellers come in. Anyway, definitely a major sign of weakness, because the market doesn't like wide spread bars in an ultra high volume.

b - Another wide spread bar with high volume. I saw no buying pressure after this demand, I saw that this action caused the market to go sideways for a while.

c - a Successful test of resistance cluster and Up-thrust bar in a high volume. Up-thrust = supply overcoming demand.

c - Doji (Up-thrust). Another sign of weakness and another successful test of the cluster.

e and f - Narrow spread of the bar in a low volume. Classics no demand bars. Since we got massive sign of weakness in the background, no demand bars are very good setup trigers.

I also found trading range and classic signs of distribution phase by Wyckoff analysis. We got buying climax , which stopped price from going higher, automatic rally, ice, Up thrust, sign fo weakness.

Will try to take 1:3 RRR at least. Risk is around 30 pips. Targets set at 0.7200 - 0.7130.

Best Regards,
Petar

Hello traders,
Took the lost 0.5% on this one but I opened buy position on USD/JPY at the price of 109.07. I marked letters on the chart and will go through explanation.

a - Wide spread of the bar in a very high volume but closed well of the low (Sign of strength). Potential stopping volume,

b - Lower spread of the bar but still high volume and the bar closed almost near the top. If there was strong selling, how the next bar can close near the top ? It must be that smart money started with buying.

c - Another supply bar in a high volume but bar again closed in the middle. Another sign of strength.

d - A narrow spread of the bar. The classic test of supply bar in a low volume. Good buy signal.

I am going for at least 1:3 RRR. TP around 110.65. Pay attention on level 109.65.

If you like my analysis, feel free to comment >

Petar