Binary Options Unmasked by Coulling Anna

Author:Coulling, Anna [Coulling, Anna]
Language: eng
Format: epub
Tags: forex trading
Publisher: Anna Coulling
Published: 2015-01-12T00:00:00+00:00

Fig 6.16 - VPA in action in a market moving lower

The process of analysis is exactly the same as in our previous example, and you can think of this as starting at the micro level, and then gradually moving to the macro level. It is rather like zooming out with a camera lens. We start focusing on one candle and one volume bar. We then move further out to focus on groups of candles to compare their respective volume and price action, before finally we look at the big picture. This will confirm if we are in an up trend, down trend or congestion phase. In other words we ‘frame’ the whole volume price relationship in the context of where we are in the trading journey for the market. As you will see shortly, we then bring in other techniques and tools to help us as part of the volume price methodology.

In Fig 6.16, once again candle 1 is in agreement with the volume, which is below average and as expected. There is no anomaly here. Candle 2 then closes with a slightly wider spread, and higher volume. Again all is in agreement. But now the market is starting to fall fast, and in candle 3 we close with a tall body to the candle. Volume is also high and confirming the price action. The selling is in full flow as the market plunges lower. Then in candle 4 we see our first anomaly. The price action and volume are no longer in agreement. Here we have a short body on the candle, but the volume is higher than on the previous bar. Selling pressure is starting to be absorbed as buyers come into the market at this level. The buyers are primarily the insiders as the volume is very high, and they are now buying as the retail traders sell. The retail traders are expecting a further move lower and do not wish to miss out on some ‘easy profits’.

But how do we know the insiders are buying? If this had been primarily selling volume, the market would have closed with a very wide spread down candle, and certainly wider than candle 3. It has not. The falling price has been halted. Panic selling is now happily being absorbed by the insiders, and this is the first signal the current down trend is potentially coming to an end. Candle 5 gives us an even stronger signal and confirms candle 4. Here we have ultra high volume associated with a hammer candle. Another of our ‘premier’ candles. The price action alone is telling us there is potential buying at this level. The volume is confirming this loud and clear, and also telling us the insiders are buying given the associated volume, which is extreme.

Candle 6 confirms this further with a further anomaly. A narrow body on the price action, but high volume. This is further buying by the insiders, as the retail traders continue selling on the expectation of a further move lower.

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