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Thursday, June 28, 2007

ES volume charts

It's (almost) all about the volume.....

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This is a 5-min. chart of ES from today's session:


This is a 7000/bar volume chart of the same session, starting at the FOMC announcement time:


The volume chart provides much more detail as to what is going on in between each 5-min. candlestick. The most obvious example that I can point out is the 1130am reversal @1518. In the regular chart, it shows a wide ranging bar, followed by another bar with a long upper wick. In the volume chart, you can see how the reversal actually unfolds, and I was able to actually "see" it coming in time to get out of my short.
Today was the first day I traded mainly off the volume chart, and I thought I did fairly well. I am starting to like the volume chart more than the PnF chart, because the PnF does have a bit of detail missing which I can find in the volume charts.
The volume chart tells me what it is doing much better than the regular charts, so I will start to use it more. I will continue to keep the regular 5-min. chart open, just so I can see any chart patterns develop.

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