Thursday 9 August 2007

Volume Patterns - Stopping Volume Yesterday

Stopping Volume pattern yesterday forewarned of turning point. The Emini closed down heavily today - down 46.25 points at 1,457.75. Tuesday's post about trading with multiple time frames explained why we were looking for a turn down. Then yesterday we got a Stopping Volume pattern with higher volume and lower range, showing that professionals were taking profits. You can read more about the Stopping Volume pattern here.

Stopping Volume Pattern Chart

Stopping Volume Chart Pattern

The chart below is just a recap of the expected Hilbert Sine Wave crossover in the 135 minute time frame. Having the Stopping Volume pattern in the higher (daily) time frame added confirmation to this likely turning point.

Sine Wave Turn Coincides with Stopping Volume Pattern

Wait for Stopping Volume pattern to halt the drop

Where to from here? My other oscillators - Trading Index (TRIN) and Smart Money - have now turned over. However, they are nowhere near over-sold yet. Time to wait for this final move to "Complete" and look for exhaustion volume patterns before going long.