The Emini is now up 13 out of the last 14 days – and I'm biting my lip so hard it's turning blue! Anyway, a couple of charts today on Volume Patterns and the classic Double Top.
Volume analysis has really added a new dimension to my understanding of what's happening at a Double Top. I hope the charts below show what I'm talking about.
Volume Patterns: Double Top (Emini 1,500 tick)
First, the 1,500 tick chart. You can see the first top was made as we overshot the "End of Trend" warning signal. There were a whole series of Professional (blue) up bars – showing profit taking and reversing positions as new highs were made.
Then the second top was made with a couple of Amateur (yellow) bars – showing the Amateurs getting in late and hoping the Emini was going to make new highs. It didn't, that marked the top, the Emini reversed and spent the rest of the day in a down trend.
You can also see the Bearish Divergence patterns (two white dots) on the Double Top. This shows there was less and less buying pressure after we'd had Exhaustion buying volume (large Cyan blue dots) earlier in the day.
Volume Patterns: Double Top (Emini 500 tick)
When we drop down to the 500 tick chart you can see the Professional (blue) then Amateur (yellow) bars as the Double Top is made.
You can also see the cluster of Profit Taking (PT) volume patterns on the first top – showing Professionals are getting out and reversing. Then on the second top you have a couple of RAMBO (R) volume patterns showing the Amateurs are buying the Break Out and might get reversed on.
So, volume patterns with Professional and Amateur bars giving a greater understanding of what's going on at a classic Double Top.
Good luck with your Emini trading.
