Friday, September 6, 2013

Volume Profile

Looks like that the double bottom we highlighted on the SPX chart in our last post materialized. What is more interesting is how we rallied right back to resistance on very low volume (the SPY volume was even lower).  We also hit the 20dma before backing off today so we are clearly in an area of resistance.  Once again to break resistance we need to see demand overcome supply and for that we need volume.   That is exactly what we did NOT get. 

I'm excited that I have found the Volume Profile indicator and more so that it fits in nicely with all the mumbo jumbo that I've been rambling about when it comes to the battle of supply and demand. The Volume Profile  represents trading activity over a time period at specified price levels.  The Volume Profile can be used to determine the strength of the demand and supply at the pre-defined levels of support and resistance.  Sounds brilliant doesn't it!? I think so. 

Thanks for reading.

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