Wednesday 4 June 2008

Trend Line Congestion & Winding Up for Big Move

Congestion zone on trend line chart means we're winding up for a big break out move. Plus … updated version of Better Volume code.

Emini Trend Line Congestion Image

Trend Line Congestion Zone (Emini 135 minute)

The chart above shows the Better Trend Lines indicator. Congestion zones are marked with white bars and indicate the market is resting and getting ready for a break out move. The 1,370 level will be critical tomorrow.

Emini Exhaustion Volume Pattern Image

Exhaustion Volume & Test Patterns (Emini 15 minute)

My bias this week has been bullish. The chart above shows why. We've had a series of large volume down bars - exhaustion volume pattern - followed by low volume tests. This usually indicates Professional accumulation.

However, every time we've had a rally, selling volume has overcome buyers at previous resistance. We've now got a double bottom at the critical 1,370 level.

Don't forget total volume today was 2.1 million and yesterday was 2.2 million contracts traded. That's a lot of volume and didn't result in much of a downside move.

Better Volume Update

Got an apology to make. In the last couple of posts I've used an updated version of my Better Volume indicator. The new version of the code uses the up-tick and down-tick data available within TradeStation for intra-day charts.

I'll update the Better Volume indicator article in the next couple of days, but in the meantime use the button below to download the free code.