Sunday, September 22, 2013

Point and Figure and Beyond

I'm pretty excited to have found out that volume by price is available on PnF charts.  This brings my PnF chart reading abilities to a whole new level.  Not only can I see where support and resistance is but now I can see the volume associated with that area of support and resistance all in one chart. 

In my last post we highlighted the levels of 1728, 1724, and 1705 using a 10 min PnF chart of the SPX.  Below is the an updated 10min PnF chart of the SPX including the volume profile at reach price range.  You will notice how volume is higher at these levels of support and resistance as one would expect since it is at these key inflection points that the battle of supply and demand takes place.    We highlighted the air pocket or lack of volume between 1705 and 1718 that this chart clearly shows.  What that tells me is that there is very little support (or resistance) at these levels.  Therefore, Fridays selling cut through this area with ease.  We can see that support (and volume) start to appear at the 1703.5 area so it shouldn't be a surprise if price finds support there.   

Friday's close was bearish as we closed near the lows of the day for the second straight day one relatively high volume indicating a possible distribution.  The key area I'm looking at is 1684 as this was a key distribution area back in early August as well as for reason highlight in my previous post you can read here.

So lets wait and watch. 

Thanks for reading. 

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