Last Friday's article talked about an approaching cyclical top and resumption of the down trend. However, the Emini continued up and didn't break down until today.
One of my major weaknesses as a trader is that I'm always too early. But trading is about making fewer mistakes and so every time this happens I force myself to analyze the chart in hindsight and understand what went wrong.
The 45 minute Emini chart below shows why Volume Confirmation is the key to picking high probability turning points. All I'm using is the Better Volume indicator below the price bars and superimposed on the price bars with a TradeStation PaintBar study.
Volume Indicator Confirmation (Emini 45 minute)
The sequence last Thursday and Friday went like this:
- 2 Volume Climax up bars on Thursday showing the end of this upthrust
- However, although the range on these bars was large, the volume was not
- 2 Volume Climax down bars on Friday showing profit taking and a potential top
- However, the low was not broken and volume on the second white bar was low
By contrast, this was the sequence from Tuesday to Thursday this week:
- Tuesday ended with a Volume Climax up bar that hit the stops above 1,268
- Wednesday morning also had 2 Volume Climax up bars (one also high churn)
- However, the last Volume Climax up bar closed in the middle showing profit taking
- Then weakness with 4 Volume Climax down bars but all on low volume
- Finally the down trend got underway with a Volume Climax down bar on large volume
The more I study my charts, the more I appreciate how reading Volume Climax bars is the key to volume confirmation and picking high probability turning points.
I hope this chart analysis was helpful to you. Good luck with your Emini trading.