The Price / Volume Relationship

[cnms2 10]

Here is my take on the day.

 

A re occurring question I keep asking myself is how to identify whether a RTL break should be fanned out or annotated for the formation of R2R. For example, 11:40, where we have the first break of the purple Tape on increasing volume from 11:30 to 11:40. During that bar, how do you know in the future that it will be fanned out rather than annotated for R2R? Are there any signals that suggest this failed break out beforehand? Do you have to wait for confirmation by next bar? ...

Context: as volume shows the red / black overlap barely ended, and even considering the pace drop expected during this part of the day (12:30 EST), the increasing black volume to point 2 is still to come. On a finer level, the red stitch with increasing volume just broke the lateral's boundary.

 

For easier communication, I'd recommend referencing the bar number as Jack does (#1 to #81).

[SK0 10]

Sym stitch up and down lateral formations with volume combinations.How would you annotate each three bar combination with its matching volume?

 

Please enlighten me and others what you are leading to for showing cases after cases of bar combinations. If you want to make people to do your drills, I hope that you will provide sufficient clues and ready to share full answers explicitly in a short time.

Edited December 10, 2012 by SK0

[patrader 10]

 

 

Please enlighten me .

 

Fair enough.Spydertrader in post #5 of this thread posted nine scenarios of 2 bar formations and how to annotate using just price bars without volume included (http://cdn3.traderslaboratory.com/forums/attachments/34/11926d1246812959-price-volume-relationship-tentapes.jpg). I recently reviewed this document and decided to update it with post #3618(http://www.traderslaboratory.com/forums/attachments/34/33027d1353525876-price-volume-relationship-cases.png). Then i noticed that the scenarios could be further arranged hence post #3620(http://www.traderslaboratory.com/forums/attachments/34/33058d1353775983-price-volume-relationship-cases-v2.png).Looking at #3620 i see it should be further refined(see attachment).Jack recently posted some "rules" with regard to processing or not processing the second bar of internal formations using volume.So i posted #3636(http://www.traderslaboratory.com/forums/attachments/34/33221d1354466088-price-volume-relationship-internals-black-volume.png) to help others think thru and annotate the processing or not processing of the second bar of an internal formation.I also posted the ways that three bars in a row could appear with and without volume.I showed how three bars is really two 2 bar "scenarios".Then i posted three bars with volume so others could start the refinement of how to process or not process different combinations of three bars(really two 2 bar scenarios but with volume).Why bother? I have found this process to be enlightening.All price movements entail really just some combination of multiple 2 bar scenarios and depending on the volume and processing or lack of processing this changes the annotations.On my current charts all internal formations where the second bar is decreasing volume the second bar is lite gray in color.This indicates visibly to me to not process(no annotation of that internal formation).Just as important internal formations with increasing volume on the second bar i know to process(annotate).Also i know when to process internal formations inside lateral formations.This should help when you review the lateral drill posted by spydertrader on sym pennant lateral formations with a boundary.Lately i am reviewing how stitches fit into the scenarios.See post #3650 and the attached updated version.After doing this what's next? How about how to merge the 2 bar scenarios together.How to include the bar closes into the analysis when a rtl of a 2 bar scenario is broken or not broken.More to come.hth

Edited December 11, 2012 by patrader

[cnms2 10]

Jack's chart and point-to-point trades for Dec 10.

[patrader 10]

Updated version of three bars containing two 2 bar internal formations with volume combinations.Part 1

Edited December 11, 2012 by patrader

[patrader 10]

Updated version of three bars containing two 2 bar internal formations with volume combinations.Part 2

Edited December 11, 2012 by patrader

[wilddog 10]

patrader, I have seen charts of spyder where he does use the second bar of a pennant with decreasing volume. It is not common so I am guessing there are exceptions to the rule, please could you comment on the exceptions?

 

Thanks

[patrader 10]

comment on the exceptions?

 

Thanks

 

Don't know of any exceptions.May want to ask jack in et if any exceptions.

[patrader 10]

Corrected sym stitch up and down lateral formations with volume combinations (all up stitches are black and down stitches are red no matter what the close of bar).Sorry for any confusion.hth

[patrader 10]

Latest corrected 2 bar cases document.

[patrader 10]

internal formations with volume annotated

[cnms2 10]

internal formations with volume annotated

Clean Page 1 :

[cnms2 10]

volume leads price. Always. And without exception.

 

...

 

in general terms: If volume is increasing, then the price trend is continuing.

 

Such is the essence of the price / volume relationship.

 

...

 

- spydertrader

. .

[patrader 10]

ftp stitch down and fbp stitch up lateral formations with volume combinations.

[SK0 10]

The attached picture shows my opinion.

[patrader 10]

The attached picture shows my opinion.

 

Slightly different context(you start with increasing black volume case A's) but still the same annotation for the internal formations with increasing black volume on second bar(last bar in each of your examples).hth

Edited December 19, 2012 by patrader

[patrader 10]

The attached picture shows my opinion.

 

Start with increasing black volume case A's then add an internal formation with increasing red volume on second bar(last bar in examples).hth

[SK0 10]

The attached picture shows my another opinion.

Edited December 20, 2012 by SK0

[SK0 10]

I am trying to confuse you with P V relationship on the attached picture.

[patrader 10]

The attached picture shows my another opinion.

 

Invalid "entry" on your last bar (price or volume) of post.A price bar in the price pane and its matching volume bar in the volume pane always have the same color.Please try again.

Edited December 20, 2012 by patrader

[patrader 10]

I am trying to confuse you with P V relationship on the attached picture.

 

Hmm. May want to rethink your reaction(the running part) to those bars.

[patrader 10]

Increasing red Case B followed by an internal formation with increasing red volume on second bar of internal formation (last bar in the examples).hth

[patrader 10]

Decreasing black volume Case A followed by an internal formation with Increasing black volume on second bar of internal formation(last bar in examples).hth

[SK0 10]

Increasing red Case B followed by an internal formation with increasing red volume on second bar of internal formation (last bar in the examples).hth

 

While....we have different opinions due to different inferences. I have more stringent conditions to annotate after change of tape sentiment.

 

On the other picture where I teased I would run, I made that statement because the price volume relationship was not there (XB decreasing volume and then followed by an inside bar increasing volume) and would be better to wait for the price limit's gate open.

[patrader 10]

Small addition(third example from the left side) to attachment in post #3673.Needed to fan the up rtl of the case A to bottom of last bar due to the fbp's second bar(last bar in this example) being black.So even though the fbp (internal formation) is annotated in red the overall container is still black.When this occurs i usually will annotate a fbp like this with gray trendlines instead of red to visually tell me the black container is still in play.hth

Edited December 22, 2012 by patrader