Sunday, September 17, 2006
EquiVolume, Box, X-Swing, EVRAA
This is from earlier in the week, showing a decent coming-out-of-lunch scalp opportunity using various methods combined on a single chart. It was such a sweet confluence, I thought it would be useful for illustrating various techniques.
Click to enlarge
(1)
EquivolumeThe equivolume indications were the primary motivation for posting this chart. As I mentioned in
an earlier post, Equivolume seeks to visually display the price-volume relationship for any specific bar. The skinny "Olive Oyl" bars on the downside drift during the lunch hour indicate little participation, a clear alert to watch for a reversal.
(2)
Alan BoxI use the 10m chart for "big picture", so at this point I would switch to a 1m or 300V type display. Nevertheless, the Alan Box shows an "up angular" that has not previously been violated, ie, touched by price, just under the drifting Olive Oyl bars, which is an indication of support. I've added a Fisher-ized fast RSI with slow average to the mix, which is also indicating upside bias (the red/white average) with the fast indicating the pullback. More on the RSI I use later.
(3)
X-SwingOne of the benefits of using X-Swing is what I call "bias". Not a mental bias, but rather, a technical indication of price pressure. In this case, price is traveling about half-way between the 180ma top Bollinger (dark black line at top) and it's mid-point (ie, 180ma), the white dots near the bottom, and both are still "up". Likewise, both the 40ma and 120ma are up and price above those. Finally, the faint "gold" 10/13ma pair slope is also up.
Not nearly as much thought as words are involved in this assessment as X-Swing is a visual method. One glance indicates "up", again, preparing the trader for a reversal signal. The first green bar after the downside drift confirmed the trade, which, again, was better seen on a 300V chart.
(4)
EVRAAIn this case, there were two "post" white EVRAA bars on earlier up bars, which are telling me there may be a bit too much enthusiasm at those points (witness the small pullbacks). But in the context of the price action up to that point, the down "gray" EVRAA bars are fairly small in comparison, so another push up is likely.
Taking the trade, even for an overly analytical trader, was straightforward. :)
More on Equivolume Fine tuning of what we see on the charts is needed, especially during transitions such as the lunch hour. The second post bar 11:50am was, in EVRAA language, a clear indication of a pullback, which was immediately confirmed by the down-bar that came in just after it. See too the same pattern on the first post bar at 9:40am. From an equivolume perspective, that skinny-ish bar was also an indication that there was, relatively speaking, little participation. Given that it was the lunch hour, this isn't a surprise, and a slow but steady drift down followed.
Another thing I am watching with growing interest is what I am for now calling "seed volume", on this chart, the green signal bar that came in after the Olive Oyl bar downside drift. Being that opening volume is typically strong, subsequent equivolume bars will, in comparison, be narrower. The "seed volume" bar will not be as chubby as those earlier bars, but in comparison to the preceding bars, it is wider, and acts as a "seed" for growing volume participation, especially when, as in this case, confirmed by other indications.
Here is the 300V chart. Click to enlarge.
Labels: chart-analysis, ensign, trading-method, volume
