FE,
I think in simplistic terms, I think of a trend like the proverbial express train. To start the train in motion in takes more effort (volume), then when the train gets going it takes a lot less, it’ll just keep going (momentum).
The train may begin to slow a little, then there comes an increase of effort, that increase may either cause the train to speed up or it may actually stop the train and reverse it.
This is why maybe so much writings about volume, guys are trying to decide from which direction is the effort being exerted. But I suppose when you think about it if the train speeds up when there is an increase in effort, then there is a good chance that the push was from the back, on the other hand, if the train slows when the effort increased …
This I do know, many times I have stood on the track with my hand up telling the train it was going in the wrong direction … not a nice experience when it runs right over, I have learned that it takes a lot more than my feeble effort to stop that train.
Just reading some more of your posts, yes stockcharts are good for EOD.
Tradingview are good for SPY on the lower tf’s, some guys go for the 5min at open, or 15
The one thing to be aware of at 5 or 15 is the V, especially on a Monday.
No need to pay for data, the free volume is perfect, remember you are looking at comparative values, i.e increases or decreases.
Often after one hour the scene is set, it can happen that by waiting the one hour pips/points can be left on the table, much better that than getting run over by a train
After I wrote my post I checked once more the two charts from Rookie to see if I can spot something before start working on solving the problem. As I said, I was have a doubt on the post and agreed mostly with Rookie’s last sentence, the question he asked about missing the whole move.
I read the chapter about volume from Murphy, read the great post from Peter with the good train example, read Peter’s attached article and once more, I went through Rookie’s two charts.
Now I think I can maybe contribute. Waiting what Peter has to say about that. Especially as the article Peter attached has some contradiction to Murphy and Peter’s own saying. To my understanding Peter and Murphy makes more sense than the article.
S&P volume does not make much sense still, but the SPY does seem to give good signals and understanding to me.
As I see a large volume with a change in trend then it is a valid change and we can expect to continue it. In Rookie’s chart, the SPY turned always on a large upward volume when it moved up. And then here comes Peter’s great example with the train and this example helps Rookie not to miss the move! As Peter said, if the train is already moving, then it does not definitely need much effort to move it anymore. Rookie will not look from this point on large volume to enter a long trade as the train is already moving. At least this is how I put it all together. Although there can still be a large upward movement in volume, this would however only mean a speeding train.
We have to look though if on the SPY bottom there is a large upward movement and no volume, then we can be skeptical about the validity of that move.
At the same time Murphy made many divergences on volume with price. No reason to discuss it here, it is like all other divergences.
One more fact which is important, most likely for our chartist, Rookie. If there is a technical pattern and there is a breakout with large volume then it confirms the patter. This has a key importance.
From now on we can maybe use our discussions to interpret volume with Peter and try to analyse market moves on it.
You know this is an unusual term in the retail trader vocabulary, retail traders are generally loners, we often hate each other, we are all smart alecs and knowalls, we most def know best.
So it is refreshing to think in terms of a team, no one person knowing more than the other, each sharing their own knowledge and experience they each have gained.
I have said this before, and laughed at, yet I truly believe it - we are the sum of our strength - no loners.
I remember a while back emeraldorc was saying how these huge volumes tend to appear on or around S&R or an area of interest zones. I think its a pretty good explanation and useful I might add. This might explain as to why the direction changes often in this case or continues with momentum with a bit of push of course.
FE… yeah I get you ! , referring to your last post I have some ideas. I’ll see what I can come up with, with an example.
Is there any engineers or physicists amongts us ? I was thinking if law of motion as we learn in physics has or would have any relation to volume and momentum ? If there is such studies done, please recommend me one, Peter ?
I still do not make new trades, but on an old computer I downloaded MT4 and started to set up charts so I can participate more in the conversations.
Here is how I see the current developments:
Our COT analysis was right on the weekend: [B]gold[/B] and [B]silver[/B] are falling once more, I do not know if someone took the trade.
At the same time my [B]Oil[/B] shorting idea does not like to work until this point. I also mentioned shorting the JPY which seems to look good, but we have [B]JPY[/B] fundamentals coming out tomorrow and that will decide the direction.
As we know it is not important if we are right or wrong in the market but I like it when charts line up the way I would like them based on my fundamental view. The last times I discussed often that I do not understand the large fall of [B]NZD[/B] as I do not see main problems there. At the same time I also said I do not get this very strong [B]GBP[/B] move as I do not see much reasons for that. In the last days as I see the technicals played out in both cases how my fundamental approach says they should. Now I only have to see if that is a small correction everywhere or the moves will be sustained.
On [B]S&P 500[/B] I do not want to say much as I always trade that with WS and without that indicator on my chart I do not feel secure.
Hey guys.
Well, the GBP news came out around half hour. And it was NOT good. Well, for the most part it wasn’t.
And this is what I have seen. The Pound hesitated and then just went up high against the USD, and JPY, and CHF. But against the Comms (all) they fell. And I mean they went down. Is very interesting what has been happening, since that news came out.
I don’t know everything that’s going on, but some things I have noticed is this.
The CAD have shot up against everyone! Across the board. (due to oil?)
The Comms are much stronger than the Majors.
The USD seems to be diving on down.
The EUR is going up against everyone, except the GBP.
So, I can see this. For the Majors…the GBP is taking over (than the USD). The Comms are much stronger than the Majors. The JPY is in the middle…weaker against the Comms, but a stronger Major. Prob just after the GBP.
This all is just so interesting!
Probably cause the USD has stepped down, and things are shifting.
Any perceptions from you guys?
Mike
P.S…Since around the start of the week (and continuing) I’m long AUD/USD, NZD/USD, AUD/NZD.
Looking good so far.
Watch out for any sudden volume increase on that short dollar trades Mike. The attached chart is an ETF that tracks dollar rally, since 9th of this month its been going down. Along with flat volume. I think its a little too early to jump into any kind of conclusions just yet. Although there might be some changes happening, I’m not sure if pound, NZD and AUD is rallying because of its fundamental factors or in the absence of dollar buyers. If you ask me to choose one answer I’ll go with the ladder. Lately AUD has been having a hard time bad indicators one after another, NZD ? could be doing okay but can it beat USD ? NZDJPY has a better chance I think, but Japan has officially climbed out of recession few days ago. So you’ll have to think carefully prior jumping on that one as well. Besides dollar, I’m not certain of any currencys strength.
I completely agree, nice analysis. If commodities find some kind of a support I think it would really boost NZD. I believe they are only not strong because of other influencing factors but their own story is strong.
What I sometimes think about small currencies like NZD and CAD though is how important is it for their currency pairs how their own economy is doing? For example look at the NZDUSD pair. The US economy is so huge and NZD is so tiny so I can imagine that maybe 80% of the movement only comes from the strength of the USD and NZD only influences the pair a little. We will never know the answer for these questions but I am sure the USD has a lot more influence in many pairs than 50%. The same is probably true for EUR and JPY. Ideas?
Yeah…you got me thinking hard. So, I backed out of those trades. Took a little profit. +41 pips.
And this has happened too much lately, this year so far. Where the USD has taken a back seat, and the commodities have made a run up. But then to eventually fall back down and the USD takes it all back again, for a time. I guess I’m not that patient (in my thinking).
So, I’m slowing it down a little now.
Gonna watch the GBP news come out here momentarily. Should be interesting. Also today is the USD meeting also.
Something is gonna happen.
I hear what your saying, about the small currencies compared to the big dogs.
But…I don’t know if I totally agree on that.
Look…first…let me say that we will probably never know these answers, like you said.
And the other thing is…I’m a nobody.
But have an opinion though.
As I see ALL the charts at the same time, I do see how they run across the board. Like the NZD. They will go up on the USD. But also will ride on up against everyone, at the same time. And I just don’t see the fact (if it is fact anyway) how they are bought under the assumption that it’s a weak USD. So how are they being boosted against everyone else? Ok…maybe because it would be coming from the traders perspective of the charts. You know, from a technical perspective rather than a fundamental perspective. I can see if their plans are moving money on many similar paths. NZD path, on the charts.
I just see things move in tandem so much. And when you mention about the movements coming from who’s the stronger economy…I just don’t see it. I think maybe because they all are just candlesticks on a chart, that they are on an equal playing field.
I lean towards that way. Which is the technical perspective, than the fundamental perspective. It’s all money, on a screen, than investments for the future.
That’s just how I perceive it.
We will probably never know.
And I am surely not more right than you.
Just my thoughts.
I talked to you.
Mike
P.S.
Here’s the NZD 1hr charts from the beginning of the week, up to this point.
Yeah, sometimes it’s just the logistics, example we just saw a big sell on USD.
We know that the move was exclusively US Dollar, but because of the weighting of volume on the Eur/Usd cross, a lot of Euro buying occurred to facilitate the USD selling.
We can see that Euro buying affecting Eur/Gbp at the same time as the USD selling - this is defying the techs and the fundamentals, especially given the UK news today and the fact that Eur/Gbp has made a new hr1 low before the fomc release.
Bottom line- GBP is stronger technically and fundamentally today - yet the USD selling has caused Euro buying which has simply caused Eur/Gbp to rise.
This is why some guys talk of divergence between say Gbp/Usd and Eur/Usd as being significant intraday as it was today - they expected some USD selling on the GBP/USD action today to affect Eur/Usd - it waited for the fomc before doing so.
Was it significant that Eur/Usd was going in the opposite direction in order to reach an area of support - maybe, maybe just coincidence.
Could I maybe add, say I had been trading Eur/Gbp today, it would have been very reasonable from TA and fundamentals for me to short after the GBP news.
I would have said to myself - aha, USD news out later but that cannot affect my trade, nothing to do with me. Yet because of the USD news my trade would be under water right now.
Will it keep going under water? - well the techs say it’s now back up to former support, the fundamentals say, that Euro is weaker, but the reality is neither aspect will mean anything if Eur/Usd keeps rising.
