The Emini closed virtually unchanged at 1,559.75 on Monday. Volume was below average at 1.1 million contracts traded. We have now had 2 days in a row with “No Demand” volume patterns (“NoD” on the chart above).
“No Demand” volume chart patterns occur when the Emini makes a new high, but on lower volume and smaller range. In addition, I like to see a close in the lower part of the day’s range.
The basic TradeStation EasyLanguage code is as follows:
H > H and H > H and V < V and V < V and (Range < Range or Range < Range)
A lot of technical analysts believe that top and bottom chart patterns are symmetrical or are a mirror-image of each other. A typical “proof” of this assertion is that given a chart with no time or price axes, a trader would not be able to tell which way up the chart should be. My research disagrees with this view.
The Emini tends to make bottoms on high volume but tops on low volume. In addition, bottoms are made quickly whereas tops are made slowly. “No Demand” and “High Churn” patterns tend to appear at these market tops.
Based on these recent “No Demand” volume patterns, my best guess is that the Emini will make a short term top soon. Let’s see how things work out.