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Hi,
May I ask a question or two on the attached DJ30 chart?
Yesterday, on the 22nd, I saw what I thought was a failed test (volume was highest in the last 6 months or so), so I thought supply was still present. At the same time the hammer was bullish....... The bar is a long shadow down bar which closed off the high. ?So there was buying in that bar proved by today's bar?
It's great reading my own paragraph above. I am not making any sense and I can't make up my mind if it's a "weak" or "strong" bar, as Sebastian would call a bar. I'm wondering if I even know what a test is... One would think I should, what with PP's and others' scores of examples...
Today's candle (the 23rd) was an up bar, closed just off the high with huge volume. But how would you see it if the 22nd were the last bar on the chart?
Thank you,
Bert |
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First off, High volume on down bars usually means selling. Unless the volume is excessive. If it is ultra high and a close on or near the low, one needs to look at the next bar. If that next bar is up, then the down bar must of contained buying. Here we do see many Ultra High down bars (prior to the 22) but they have down bars following them. This means the bars are weak.
Also there are no Test bars. For one thing the volume during this period is way to high. There could be a failed Test with this high volume, but in this case there is not.
The "hammer" on the 22 clearly shows strength (demand entering). It is a down bar that closes in its upper portion on Ultra High Volume. If the volume on that candle represented selling, the close would have to be lower. The candle on the 23 is a STRONG BAR. it closes near its high, does not make a lower low, but makes a higher high (buying bar). What you would be looking for is either a down bar on low volume that trades down into the Long Shadow of the Hammer candle and closes on or near is highs: This would be a test. If the Smart Money is still not yet interested in higher prices, we should see a narrow range up candle on low volume (volume less than the previous two).
Remember: markets do not like high volume on up bars. So, while the last candle is strong, there could be no follow through. We may see price move sideways. But at some point should trade back down into the area of the Long Shadow for a test.