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A different way of interpreting volume

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A different way of interpreting volume

Yesterday I was watching the DOM as CL reached the 48 mark and noticed heavy absorption as Bids tried to break the level. This came after a relatively strong up move after a day of indecision.

@silver99 saw the same thing but from a completely different perspective. He entered a trade based on similar analysis so I asked him what he had seen to take a particular trade and his response was:


Quoting 
I wanted a volume spike into 48.07 area which didn't occur. I had a resting short @ 48.15 and when I saw the volume spike @ 11:48 top out at .00 and die, I dropped in the limit @ .99 and was filled on 3 short.

silver uses the volume indicator which paints a bar indicating the volume of trades per candle as in the following image:

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I decided to load that indicator and compare it to what I was seeing on the DOM (same time and place approx 17:47 06 June 2017):

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The disadvantage on the chart (as I see it) is that you would have to wait for bar close to make a determination whereas the DOM allowed a much more proactive opportunity. Unfortunately I didnít save the DOM window but it was classic absorption.

The advantage of chart volume is that it is a lot easier to simply compare the volume with candle movement and decide on a course of action. Its a black and white approach Ė bids smashing into offers, price not moving at significant level, scalp a short.

Its interesting to note how others interpret data. Im not a fan of lagging indicators but that doesn't mean they cannot provide valuable information provided they are used properly.

Im interested to hear how you use volume.

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