Forum Archive Index - October 2001

[Phaedrus <Phaedrus@techemail.com>]

On 30/9/01 I posted a BRY chart with the following comments :-
 "The current BRY chart is showing a perfect example of Volume confirming Price 
movement. To confirm a price movement, volume should increase or expand in the 
direction of the existing price trend. By monitoring price and volume together 
we are using two different tools to measure the same thing - buying or selling 
pressure. Volume tends to precede price, so a loss of upside pressure usually 
shows up in the volume figures before it is manifested in weaker prices."
  That is exactly what went on to happen in this case. On 1/10/01 the price 
rose strongly again, BUT the volume was lower. Same again on 2/10/01 - price 
higher still, volume lower yet again. Upside pressure was weakening fast - the 
falling volume signalled this clearly. The uptrend was faltering, and ended the 
next day.
  There were other clues though. Note the long upper shadow on the candlestick 
of 1/10/01. Sellers were gaining ascendancy as they pushed the Closing price 
well down from the days High. See how the High of the following day was no 
higher than than that of 1/10/01 - another sign of weakness, a "Tweezer Top". 
This candlestick also formed a "Star" - a short-bodied candlestick that has 
gapped away from the long body of the previous day. When followed (as here) by 
a black (Close below Open) candlestick, this classical reversal formation is 
known as an "Evening Star" so called because they appear just before darkness 
sets in. 
  Looking at the relative volumes, what would you say about the strength of the 
current Uptrend? (Volume bars are blue when the Close is up, red when the Close 
is down.)
            Phaedrus
        
       

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