Anybody use Volume Candles? MBT recently sent out a tip on it but I don't fully understand it. How can they be used to be a benefit?
I use them to watch for a couple of things. All of these things can be seen without colored volume candles, but I am a visual person and visual patterns make it easier for me to jump on opportunities.
The volume candle simply reflects the color of the candlestick above (green for an open candlestick and red for a closed candlestick; I use red and green candlesticks, so they are the same color as the volume bar).
Here are the patterns I look for, and generally just as a confirmation for my other indicators rather than a buy/sell signal:
Volume Up, Price Up -- Buying pressure, price should go up, BUY
Volume Down, Price Down -- Support Reversal, price should go up, BUY THE BOTTOM
Volume Up, Price Down -- Selling pressure, price should go down, SHORT
Volume Down, Price Up -- Resistance Reversal, price should go down, SHORT THE TOP
Like I said, these are not buy/sell indicators, but confirming pieces of data that can help make a buy/sell decision.
Dave |
