welcome to bar chart series of webinars designed to educate you about a variety of market concepts inform you on the features and tools bar chart provides related to these concepts and finally to give you some traders insight and how to help you make a more informed investment decision today's subject volume the most important technical indicator so having spent oh 20 plus years working on the trading floor the nymex one comes very in tune to certain sensory inputs and one of them was the noise level that was coming from the pits now to an outsider or
a first-time visitor the noise is quite surprising but to a seasoned trader you can distinguish between an active day and as the saying goes a quiet day and that would be by the level of volume coming from the pits now the louder it got meant that more traders were competing for bids and offers and the more active trading became it increased the significance of the price movement and the more the price movement trended the more the volume became now today's modern traders don't have the advantage of hearing the noise that is coming from the former
pits but they do have volume the record of trans actions between buyers and sellers and this silent indicator can be as deafening as the days in the pits when it comes to awareness of price and price movement hello everyone my name is john roland and yeah as i move from being a floor trader to becoming an online trader i had to discover a new uh skill set and one of these skills was learning the importance of trading volume as i had learned the importance of the noise from the floor volume so what i was going
to do for you guys today is i'm going to share with you you know how volume validates price uh the four phases of price volume analysis and then the significance of peak volume and low volume but before we get to that please welcome my partner and our moderator bar charts project director gene baker hello gene well hi john how are you i am doing fine and yourself i'm great hey so i hear you have uh you go by the oil king cousin now well we did this i did a guest spot and uh they were
asking me how i wanted to be known and i guess well i started in the oil business so we kind of made fun about that so yeah the oil so you are the oil king cousin all right so let me ask you a question so have you ever been to a cocktail party or a house party and you know by the instant you walked in the party if the party is happening or it's exciting right of course yeah how would i only go i only go to the exciting parties and i ca i can tell
that i know where you're going with this by by how loud it is in the room right right the the volume of the conversation right you know people so trading is very similar to that what we're going to look at is volume this excitement to the market as a way to help validate our price okay so you're ready to get started gene let's get going all right let's do it all right so to remember today's session is for educational purposes only and the decisions to buy sell hold or trade securities commodities or other investments involves
a risk and best are made on the advice of a qualified financial professional and under so no circumstance shall we be liable for any loss or damage you or anyone incurs as a result of any trading invested investment activity that you or anyone engages in based on information or material that you receive through bar chart and or our services okay so as we start our journey today uh i want you to keep in mind four key components when it comes to volume and how volume relates to price and price action so the first is high
volume confirms our trends in other words the strength of our trends will be confirmed by rising volume second is low volume actually contradicts the trend lack of volume tells us that the market isn't excited or there's no emotion about price or price is found in equilibrium volumes decline in consolidation patterns as price tends to trade sideways there's a lack of conviction and price is waiting for that fuel to push it through an area of support or resistance and that fuel is volume so an increase in the volume is a sign of the beginning of a
new price trend so you can see here that there is this kind of this cycle or a symbolic relationship between volume and price price moves because of volume and price movement attracts volume so they kind of interactive so what are the four phases of price volume analysis so again as we look at these i want you to think about or concentrate on when you start looking at your charts these different four phases but more importantly what i want you to think about is what are the results and the probabilities that these phases bring about so
the first phase is strong demand and in strong demand price trend is up and volume is rising in other words it's confirming an uptrend so let me go to a chart here and i'm gonna pop this out so we can see this now before we get into depth into our chart analysis when we look at volume i do need to speak about a couple things and i'm going to do this throughout the process of today so the first thing is that on any chart that we have we can add volume to it and that's easily
done through the studies uh button up here and i can just type in volume so i could just click on volume and it would show me that volume on for that particular chart but volume has a lot of variance to it in other words you know it fluctuates from day to day or from hour to hour so one of the things we might want to think about is i want to have a smooth baseline in other words a moving average of volume so one of the things we can do is we can do a volume
moving average and we can add that to a charge and this is going to kind of give us a baseline we're going to we'll be able to tell when volume is excited above that baseline or when volume is dull when it's below that baseline and that's what we see here now the other thing that we can do is instead of having to add this to our chart every time we can create a template one of the benefits of becoming a subscribed member of bar chart is allowing you to create certain templates and that's exactly what
i've done here is i have a template that has volume that average volume and that's what we're seeing uh here okay so phase one strong demand uptrend rising volume here we can see our uptrend and this is in natural gas it's been in the market been in the news as of re recent and you can see where our trend started to begin we start seeing this kind of staircase rise in volume a rise in volume is confirming this uptrend now later in our discussion we're going to talk about peak volumes or spike volumes and what
they represent just be patient with me we're going to get to that but we can see here in this green candle in this red candle we did get a peak volume and that peak volume at that time was twice the daily average volume so that would be something significant and when we come back to this chart we're going to look at this candle right here this green candle and now we're seeing volume is even rising even more so this could be something very very significant we will look at that a little bit later okay so
phase two well this is weak demand and price tends to trend up but price is excuse me volume is starting to fall its volume is starting to wane and this is a sign of our uptrend is weakening so this is a chart of gold and i want you to concentrate here on the price action that's inside of this pink box and we can see that price is rising it's trending higher but if we look at our volume our volume is decreasing or it's below that baseline you know we have this peak volume where the price
bottomed and then from that point on what did we see low volume so we have an uptrend but we don't have strength to this uptrend we don't have conviction to this uptrend and so this is a weak trend now i want you to look at something here and this is kind of what we want to start doing when we look at volume is price was allowed to rally on light volume there wasn't a lot of resistance why wasn't there a lot of resistance because if we look to the left of this rally we don't really
see any real structure plus the structure we do see is related to very low volume no conviction right nobody was really cares about price in this range but notice that price did rally and where did it stop again if i look to the left and i look at volume as an indicator of price conviction notice we see a large amount of volume being generated in this region now for my candlestick traders my support and resistance traders this is kind of an area of resistance for supply and demand traders who understand what supply and demand represents
here's a drop based drop a very strong area of resistance so price was allowed to rally up until it found a price of conviction how do we know it's a price of conviction by the volume that was created during the time of that price action so volume can also tell us the strength of a trend but it also helps again validate our price stage three strong supply now this is where our price trend is down downtrend and our rising volume again our downtrend is now being confirmed so let me go to the cues here and
again give me a second here i need to talk to you about a nuance about some of the charts that we have so if i am looking at an equities market not we just looked at two futures markets all the data that we get in futures markets is on a time delay that's how our charts work but for equities markets equity securities uh we do have real-time trading now if i have up here where it says real time i have that box checked what it's going to do is going to give me the data that's
coming from the cboe that's it's gonna be coming to me in real time but the bats the cboe bats only represents about a tenth of the whole market so we're seeing real prices but we're only seeing about a tenth of the volume of the whole market now watch what happens to my volume today if i go to real time my volume drops so if i'm going to do volume analysis i either have to wait until the end of the day to when everything is official or i'm going to take it off of real time now
notice i'm still getting real-time data up here in terms of price action i can still see that but now i'm getting to see the all the volume for that particular market so that's a little bit of a nuance that you need to be aware of all right so again we're in phase three we're in a strong supply cycle and we're in a downtrend on rising volume and again here we can see that here's our downtrend and here's our rising volume again notice how we get that staircase of volume as we are transitioning on our price
trend now what did happen with price here well price continued to fall volume continued to rise and then we get another peak volume and again this is where we see the end of our price movement now it doesn't mean that it's the end of the trend just means that price is not going to move any farther from here it needs to either gather strength and then maybe new volume to push it lower or a lot of times we'll see is a reversal in price again we'll talk about peak volume in a bit but again what
it was the one of the things that we talked about in terms of validating price that consolidation tends to find falling volume and so if we look at this price action right here this consolidation came on very light volume now if we look at this in hindsight in terms of the big picture this area of consolidation of low volume was also where the market was attempting to make a new high and we didn't get an enthusiasm and an emotion of new volume to make a new high and that would have been a warning sign to
us that something was about to happen and in most case whatever new volume came in would dictate the next trend and that's exactly what we saw a rise in volume on a downward price action in the beginning of a strong supply cycle and then finally phase four is weak supply and so weak supply comes usually after a major downtrend i'm going to show you a little bit of a different example but a downtrend on falling volume is telling us that that downtrend is weakening so phase force weak supply downtrend on falling volume no conviction right
sometimes referred to as kind of a dull market now look at this price action again i want you to concentrate on the price section that's inside of this pink box this price action right this is a really nice trend i mean if you were looking at this you know this trend is in control there's a lot of lower highs and lower lows which is defines the downtrend but notice that our volume is declining so price is trending but there's no conviction behind this trend and so that when price comes to retest this trend then price
is going to fail in other words there's no validation to it now we deemed to talk about another nuance here and that is the color of my volume bars as it relates to my candles now if we have an up day in other words the price of the market closes above the previous day's price an up day then the volume bars will be green in other words up volume market moved up then we're going to categorize that volume as up volume if the market price is lower than the previous day's close then that would be
determined as a down volume day and so you would have a red candle now notice though we have a red candle for our candle but we have a green volume bar so something's going on here what is going on well it's about how i look at candles or how i have set up my defaults for candles so on candlesticks we do have a choice of different types of candlesticks the more common use of candlesticks is the open to close what we want to see is what does that price action that is represented by that one
candle so if a candle opens up lower and closes higher that would represent an up candle or a green candle but in this case price opened up higher and closed lower therefore this is a red candle a down candle the prox price action for that particular day is showing me that there was selling pressure in that candle but if i change my candlesticks to close to close now my candles will be related from the previous day's candle in other words notice how my red candle now turns green because here is the close of the previous
day and even though the selling pressure we saw on the open to close candle the price of this candle still closed above the previous day's candle that's why it would be green instead of being red but this is significant isn't it right we have a selling pressure on an up volume day it's time kind of telling us that bears are trying to get back in control maybe we are starting to see a conviction now the next day what happened price fell right we do see a red candle and we do get a red volume bar
in other words price did close lower but our volume is a lot less than our previous day volume here volume is contradicting this price pressure this selling pressure if we really thought bears were in control what would we want to see we would want to see this volume be a spiked volume or an increase in volume certainly above the volume that we saw from the previous day now the next day what do we see well we got an up candle on up volume and not only up volume but this volume was above the selling pressure
of the previous two days so this is a clear sign to us that not only have do we see an excitement of price action on volume an increasement of volume and that could be the sign of a new trend and now notice what happened with price well it did gap higher the previous the next day and this could be the beginning of a new trend but i think what really what is being represented here i've right clicked on my chart and i've gone to events and i'm going to click earnings and this is what this
green candle here was on earnings day for ibm and i believe earnings came out after the close and so what happened was those were really good earnings and then price action shot up right shot up and again we got this big spike in volume as either shorts that were in the market got trapped or maybe this new conviction of buying uh ibm now what is interesting here is price after we got this spike in volume what did our volume do it dropped dramatically right again an area of consolidation falling volume if we really believe this
was the beginning of a new trend what would we anticipate we would anticipate our volume to continue to rise right so we're not really getting that conviction what we're really getting this kind of a knee-jerk reaction to earnings but i also want to think about why did price stop right here why did it run up and then stop right why didn't price continue to go or why didn't price consolidate and then run up well if we go over to the left all the way over here to the left and for my candlestick aficionado maybe you
could type in the comments what do you think this candle is those of you are not aware of different types of candles this is a very strong reversal candle versus reversal price candle and this candle is called a gravestone it's a kind of a doji a battle of indecision but with selling pressure now let's look at this candle one of the cool things we can do with volume is i'm doing a lot of analysis today at the daily level but we can use volume at multiple time frames higher time frames and lower time frames so
let's look at this gravestone candle and notice that we do see some significant volume so there's something definitely going on here and so not to trick you or confuse you here on this gravestone candle look up here in the left-hand corner this gravestone candle occurred on january 5th so i'm going to drop down to a lower time frame this is a monthly chart and an hourly time frame and i'm going to just kind of give me a second here to adjust this a little bit and there it is and then i'm going to make it
a little wider so you can see it okay one more time there we go okay so here we are january 5th and we're in an hourly chart and again what type of candlestick pattern do we see those who aren't familiar with candlestick patterns well this is called a tweezer top and this is another reversal pattern but this is a reversible pattern that's happening at the hourly time frame and notice that price did what fell away fell away dramatically it fell away on what volume who's in control sellers are now in control and what i did
was i just drew this dotted line right at the top of our tweezer top and we go back to our chart our monthly daily chart and look at that price rallied to the last point where price was validated by volume it literally was by a penny it came right to that tweezer top by a penny and then what did price do it stops and now it's kind of basing now if i believe this is the beginning of a new uptrend over the next day i want to start seeing volume increase but if i see volume
falling as we're seeing today we're in a consolidation pattern and so whatever volume comes will dictate the next trend and my guess is that we'll probably break this support level right here and come back and fill this gap maybe on a higher volume event okay so those are the four phases of price action as it relates to volume all right so we talked about we showed you a couple examples of peak volume so what is the significance of peak vine so peak volume is the market's way of telling us that a price movement is about
to happen and often high volumes signal a potential reversal in the current trend or price movement or it's that fuel that's going to spark the next trend the next price movement from consolidation in other words and you know spikes and volumes come in breakout patterns so these extreme volume events are really announcing this battle of great conviction between buyers and sellers this you know they've come together right they're excited they're emotional right there's this big battle between them so we can look at these events in two lights the first is we can look at it
as a single candle in other words a volume bar and candle and if i see a peak volume that is only one candle or one volume bar this kind of means that price has reached an extreme and what is happening is that price control is being wrestled away from whoever was in control to the the opposite party in other words bears to bulls or bulls to bears that would be a single candle event the second candle event or peak volume event would be more important for us and this is towards our trends is we want
to look at a cluster of peak volumes and then this is a clear sign to us that there's a coming price movement now typically that is a reversal signal these clusters so again when we talk about ibm here this is a peak volume on one bar and what did we say that usually tells us that price is reached an extreme we already discovered that but also that the price action is being rustled away from the bulls in this case because this is a green candle to potentially the bears if i go back to my natural
gas and i look at those peak volume notice here here is an extreme in price that came on that peak volume but what do we see we see a cluster right several days of peak volume in other words way above our moving average here is that significant battle with this excitement between bulls and bears and also that signal to us that there's a price reversal about to come now what i said to you about is something is very very significant significant of what's going on in natural gas in the last couple of days is notice
that price falls a change in price direction a new potential new trend and price falls and then we get this green candle and this candle green candle came on another peak volume bar matter of fact this volume bar was greater than the peak that we had seen before where price had reversed so what do we say peak volume is the wrestle of control from in this case from bears to bulls but also an increase in volume from previous volume is also telling us there's a new excitement or new money is coming in so this is
a very significant low now for natural gas that price is now going to move higher and surely we see that another peak volume now notice this peak volume came on a very little teeny candle a big battle went on here bulls and bears are really battling it out and who won that battle looks like volume is continuing to rise and so is price so it certainly looks like to me that we are now seeing the beginning of a new price trend now if we see a reversal here in price and we get a red candle
or a red volume day then that could be again another big battle going on here between bulls and bears but it really really looks like in this case this was a significant swing in price action for natural gas let's go back to the cues for a second and again you know here's again that's kind of that rustle of control away right a peak volume right as price went from a downtrend to a kind of a sideways action right if this was a beginning of a new uptrend we probably would want to see a little bit
of a higher cluster and you know volume kind of rising but we don't really see that right notice again there's a single bar peak volume where we have a change in control of price movement right okay so charles dahl uh the dow theory some of you might have heard of that really believe that substantial increases in volume often preceded let me say that again increases in volume preceded significant price movements beginnings of trends reversals of trends and so these spike volumes are kind of the things that we want to look for to give us a
signal of some kind of dramatic price movement all right so that's kind of peak volume so the other thing we can talk about is the caveat of low volume what does low volume really mean to us so even though price can trend in a low volume environment low volume is really kind of telling us a sign that there's no conviction and that there's not really new money going into that that trend so remember you know typically our weak demand or supply phases right our weak trends but what i want you to think about is in
terms of trading opportunities that when we're in these low volume environments and we see these trends that when price comes back and retests this trend in other words we get a correction or a pullback or however you defined it that these levels inside of these trends are going to fail because there's no conviction behind them there's no money behind them and so weak phase trends are trends that are going to fail so weak supply is usually a strong indication that price action is bottoming now the example i gave you is the ibm but i wanted
to try to find something that was current to the current market but typically what you'll see is after a long extended downtrend you'll see volume is kind of just piddles out you know sellers don't really care anymore they're not really enthusiastic and then you know volume really kind of dries up right sometimes you might have heard that that the adage you know never sell a dull mar market right that's where this comes from right low volume at a low end of price action at the bottom of a trend is really an indication that our market
is gathering energy and is ready to start maybe a new uptrend and weak demand again i showed you an example of that um is where our buying enthusiasm is waiting right it really is kind of no new money is coming into the market and this is a sign of a weakening trend so again let me go back to those examples so here's ibm well not imb so ibm was our weak supply right we had this downtrend over here weak supply no conviction that was why price was allowed to jump so significantly until it found a
price of conviction based on volume but let's do a little bit different i've showed you a couple different charts let's go to apple and this is kind of really cool i'm going to really hopefully bring this together for you folks so here is apple and what i really can again i want you to kind of concentrate on what is going on inside of this pink box so inside of this pink box we see both a weak supply cycle and a weak demand cycle in terms of supply and demand zones but let's look at this um
trend right and some of you might have remembered this few you know about a month ago we had about 13 days in a row where we didn't even have a green a red candle just a green can of green candle green kettle and you know the jim cramers of the world were saying you know we're going to make a new high and that's the bottom and this is whatever but notice that volume there's no conviction volume we had kind of just normal volume on all these green candles right you didn't see a spike in volume
we didn't see that conviction so this is a weak uptrend and then when price comes back and tests any of these levels what did it do well it maybe held it for a moment but then price broke down price the trend failed because this is a weak trend no conviction behind it so this whole area this whole pink area is really what we call an area distribution what is happening here is shares are exchanging hands and usually areas distributions are where institutions are selling to uh retail traders and what we are seeing in recent days
is we are starting to see a uptick in volume and we are seeing that in context of a falling market that could be a sign of a new downtrend now i'm not going to really get too enthusiastic about what's going on with apple right now because many of you are much aware of is that we have earnings next week excuse me tomorrow so i think what we need to do here is wait for a volume event and then again an increase in volume maybe even a spike in volume that's going to drive price out of
this pink box and out of this area of a distribution and that could be the next trend it could be a downtrend it could be an uptrend i don't know i just know that probably the earnings will be a catalyst for an increase in volume all right so there's other ways we can look at volume and there are other technical indicators out there that are based upon volume so one of the ones that is i would consider old school that has been around for a long time something called on balance volume or obv and this
is kind of an old school indicator and the concept is very simple here is that high volume in one direction or low volume in the opposite direction usually confirms the price trend or that light volume in a price direction or heavy volume in the opposite direction is a suggestion of a potential price reversal we kind of did that right we looked at that spike volume we looked at you know our strong demand weak demand strong supply week supply we kind of talked but we can also look at obv as a value a trending value and
then we can look for price divergence which some of you might be familiar with so an uptrend in volume or an obv is a confirmation of the price action that we're seeing and a downtrend in ovpv is a clear sign of liquidation so let me add this to my chart and again let me give you a little bit more of a perspective here big picture perspective and here we can see our odb is rising right rising with our trend and that is a clear sign of a strengthening trend now the way it's calculated is they
take you know an update versus a down day and then they add the volume to it and it's complicated and i'll show you how to where you can find that information what i just want to show you is notice how many more green candles are here in this uptrend right kind of big picture analysis and then what we can do is we look for those divergences where we see a change in our ovb but we don't see the change in our stock price so for instance here we can see our obv peaked right here and
that was the all-time high for the qs but what did our smoothing average due it rolled over it kind of got flat and then we have what is called a failure swing we didn't get price we didn't get our ovb to get back above that smoothing average this is a failed swing this is what is called negative divergence this is a sign that something is changing even though at the same time you can see that our v is falling at the same time we were trying to make a new high so there's a clear conviction
here that something is changing and that now without new volume that our market is about to roll over and now we can see our ovv is trending lower a clear sign of liquidation and again if i just look at these candles these volume bars excuse me i see a lot more red volume bars than i see green volume bars in other words here we see volume is kind of confirming this downtrend that we're seeing in terms of price action all right so there are other indicators we can use one of the one of the ones
that all is volume related is something called the accumulation distribution there's a there's the williams and there's the chicken where's it there it is the chicken one so the williams one is based on uh average true range some of you might be familiar with the average true range and we're going to kind of use this um like we would use a macd moving average conversion divergence so let me add that and again you know let me kind of just squeeze this up a little bit for you what we're going to do is here's kind of
our smooth average and like in the macd is when we get the line crosses over from above to below that is a cell indication right and notice that as it crossed over right there it is crossover that would be a sell indication when it crosses from below to above that is a buy indication again you can see what price did after that again here's another buy indication right there and then here was a sell indication so i kind of like this one it's a lot easier it really kind of confirms my market analysis the um
shaken one is more like um [Music] like an rsi where we're going to look for extremes in terms of price action you know notice it's very similar to our williams but what we're going to do is we're going to wait for like oversold conditions bottoming conditions as buy signals right buy signals or you know these peaks where it's over bought as cell signals okay again we can use that negative divergence right where price action is rising but the williams indicator or in this case the chalking one is falling so again kind of more like an
rsi so if you're interested in um technical indicators or some of the different ones so under our tools section under our resources we have something called the technical indicator library and in here you can find all the different technical indicators that are available on our website and you know there's some you can click on them and see the written description so the other one that i want to show you is called the v web or the volume weighted average price and this is really for my day traders and you can see that it's really used
for inter day charts it's kind of really a way to look at the internal trend for that particular day or that momentum for that particular day and again as long as price is above our v web it's kind of telling us that our trend is up for that day or if price is below then our trend is down for that day and again this is really for my day traders out there so let's go back to natural gas then let me go to the chart and i'm going to pop it out and again this chart
is a six month daily chart but again the day trader we're probably going to be looking at lower time frame so let's change this to a monthly chart and now a monthly chart is a 60 minute chart and let me kind of make that a little bit bigger for you so i'm going to add my vwop there it is and i'm gonna add it to my main screen i want to kind of lay it over top of my chart action now there is something down here i want to show you is we can also look
at standard deviations of v wap and again this would be kind of using it as a um an oscillator or a bounded oscillator so you could see look for opportunities when the market is over bought or under oversold in other words it prices deviated deviated away from via but i want to just kind of show you how i use it so i'm going to add that and again let me kind of make this nice and big for you so what we see here is these humps and volumes are really kind of just showing us the
volume during the more active times the regular trading hours of our markets for natural gas it's probably about eight o'clock in the morning um eastern time to about oh about you know three o'clock four o'clock in the afternoon so that's what these humps are showing us so what does the v web kind of tell me uh so in on this particular day right i'm seeing you know price is staying above the v web which is telling me that for this particular day the momentum or the trend of that market is an uptrend so i'd be
more inclined to look for buying opportunities or looking to find demand zones looking to find those candlestick formations that are in my uptrend that i want to enter into um let's go back you know let's look at this day again you know price is staying below my v web right again internally for that today's momentum is trending lower so as long as it's trends lower you know i'll only be looking for shorting opportunities but let's look at this day on this date and what do we see well price got above and then it got below
and then it got above so if i get one day if i get one candle that closes above and then i get another candle that closes below i get two different singles what this is really telling me is that there's no momentum or there's no trend for this particular day and so i wouldn't trade this particular market i would look for an opportunity in another market so it's kind of a really nice little tool to help you to identify internal trends on a daily basis but also help you to kind of decide that you know
by you know seven eight o'clock in the morning i've already decided that hey you know what i'm not trading natural gas today because it's been fluctuating back and forth um and i'll look for another opportunity right so here's a good example here's you know we caught the trend right let's say we caught this trend we're you know catching this momentum but now price has broken back below it so that would have been a signal for us to exit our trade and walk away and then say hey you know it's it's over for today and maybe
we'll look for an opportunity tomorrow okay so that's kind of just what that um indicator is uh it's really really a better indicator for those who are uh day trading all right so i'm getting to the top of the hour i do want to try to answer some questions but i also want to give you guys some uh take away so gene let me kind of read some of these questions if you want to address any ones that are more um [Music] common questions i guess well i'll give you a moment to read through the
questions you have a lot of questions coming in here and i want to just say off the top of the bat that if john does not get to answer your question today please please please email support barchart.com we've got a wonderful crew there that are happy to answer any questions that you have a lot of questions coming in here john and i think that you've opened up your eye or opened up everybody's eyes to the significance of these volume bars that we see all over the place bar chart also has a number of pages that
deal with volume that john didn't even get to touch on today because he's been giving you all this information about how to read the charts and the volume on the charts so um if you are not a bar chart member i really really suggest that you just sign up for a free account if nothing else that way when you go and you look at your own charts you can draw trend lines on them as john has has shown you how he's doing on on the charts that he has up today you can play around with
your own volume type of indicators and you know get more accustomed to reading the chart signals that john's taught you today okay thanks gene okay so chris asks what period would you use for an average volume line so chris i think it really comes down to the trader uh if you are an investment trader long term you know you're going to probably look at you know monthly weekly daily as your multiple time frame analysis so you know 200 days 50 days you know much longer period if i'm a swing trader which is kind of what
i am now in my older age you know i look at a 20 period you know again at a daily level it's a 20 period and represents about a month's worth of average volume but if i'm a day trader you know i'm looking at you know you know i want to smooth volume out those variances so maybe i might use a much smaller uh volume line so for instance you know again every trader is different but let's say you're using five minutes as your lowest time frame well you know maybe you're using you know half
an hour or an hour as your trend time frame so how many five minute periods are in 30 minutes well there's six right so you could use maybe a six how many uh if i use six on the 30 minute time frame well that's what about three hours and for day traders you know a seasoned day trader is going to tell you that most of the price action that you're going to see especially in futures markets occurs in the first three hours of the day so maybe six i don't know i mean it depends on
the trader um so i see a question about a different color volume bar where you know price was changed i think we answered that um ben excuse me dan asks is volume a better indicator on larger time frame as it compares to lower time frames yeah i think you know again i always believe that the higher the time frame the more significant it is in terms of trend analysis but again i showed you how you can fractalize it you can go down to a lower time frame and really zone zoom in volume and look for
you know use our western uh technical analysis um with that more eastern philosophy of candlesticks looking for the patterns and then looking for the volumes that confirm the candlestick pattern that we saw at lower time frames um scott asks about 20 versus 50. i guess i guess he's asking again you know again scott i think it's really just about the trader yeah 50-day volume moving average volume might be a good period for somebody who's more of a swing trader or a longer term investor 50 is kind of really the industry standard for let's say institutional
traders or looking for longer periods of time um so again kind of answer both of your questions there scott uh so jack black asks uh can volume indicate or oversold and overbought situations i think i kind of showed you that in terms of you know single candle spike volumes versus cluster volumes but really overbought and oversold signals or indicators are really kind about momentum i guess um and yes are they two different technical analysis yeah do they coincide or timing wise do they line up typically they do so but again remember what dao said was
that typically volume spikes preceded all right proceeded right and that could be you know we could still get an overbought or oversold situation after that before price reverses okay all right um so joseph asks can the view app be used for daily and weekly charts yeah i can but again that's really far more of an institutional trader out of the daily basis what they're looking at is you know they have large orders they want to try to get off and if they try to jump into the market all at once in a large order they're
going to disrupt the market so what they'll do is look at the view app and when price deviates from it for instance let's say it falls below the v web then that is kind of a signal to them that it's a little bit better timing for them to be a buyer or if price gets above the v web it's a better timing for them to be a seller so it's a way for them to piecemeal in large orders um so um for us for retail traders yeah maybe a little bit you know again maybe you
could use that standard deviation to look for you know that oscillation at the daily level to help find oversold or overbought situations but it's really more for an institutional trader okay so john one more question that keeps on popping up here and i'm i don't know if you've covered this at all uh but when you're looking at volume and you have a blue volume bar yeah so a blue volume bar is let's see if we can find one for gene we'll see if i find you one gene how about that i know you i know
i saw one of your charts earlier that have right here it is volume right so a blue volume bar just tells us that on that particular candle or that volume bar is that price is unchanged in other words it didn't go up so it wasn't a green bar and it didn't go down so it's not a red bar so it just means unchanged so if you look at the very top uh the main chart at your mouse over in the upper left corner of the chart you'll see the changes at zero so blue blue volume
bar means the price is unchanged for the day okay i just want to make sure that yeah because that question keeps on popping up here yeah that's that's definitely one of those ones that our support team gets a lot too right exactly right okay all right so what are some takeaways okay price is simply the result of volume it's a very simple concept but it has a wide array of interpretations and i've shown you just a few of those interpretations today volume tells us the truth behind price it validates it rising volume is that confirmation
that participants are getting excited they're emotional and this validates price strengthening trend but also for my supply and demand zone traders out there zones that are in the strong cycles where we see rising volume those zones have greater probability and are more likely to hold when they get tested when that trend is tested so let's concentrate only on zones that are in those strong volume cycles volume is that fuel that moves price falling volume tells us that participants are not interested in price they're not concerned they're not emotional there's no conviction they're not putting money
into work which casts a doubt on price and so in week supplies week uh volume cycles those trends tend to fail and those zones don't work no conviction no quarter complacency is a trend killer and then finally spikes and volumes are a warning sign that price is about to move dramatically we looked at that could be a reversal in our trend we looked at a lot of examples of that but also for breakout traders you know an ex increase in volume as prices breaking out of our range that is a really good indication but typically
these spikes are peaks of motion they are alerting us that there's this major battle between our buyers and sellers and that that battle is for price control and that typically is a reversal signal and so one of the oldest adages i've learned on the floor was they don't ring bells at tops and bottoms but they do bring volume so i hope you guys enjoyed today's session i really believe that it's one of the most under looked technical indicators by traders but i think it's one of the most powerful ones and you know go back and
look at some of your trades and see the ones that worked and see the ones that didn't work in your logbook and look at what volume was doing at that time you know you can actually kind of start if you start looking at volume bars and volume moving averages you could you don't even need a price chart you can kind of look at that and see what's going on and make some assumptions of what price is doing based on those volume bars okay so as always i want to remind you that what gene had said
about learning about the different tools or what i showed you about creating templates you know you need to be a subscribe member to do that we do offer a bar chart free trial 30-day trial and gene do you want to talk about this right as you see we have nothing scheduled right now we don't have a webinar scheduled for next week we're going to take a week off and kind of look at everything that we've got on board topics that we want to cover and we'll be back shortly with a a new announcement here on
this page but if you want to be notified as soon as we do pick a topic for our next webinar john's showing you right at the top there it says bar chart webinar notification in yellow if you just put in your email address there we will send you an email as soon as we do open up registration for a new session you'll be the first to know we also have a youtube page and you can subscribe to our youtube channel today's session is going to be found on that archived webinars tab john go ahead and
click on click on archived webinars so today's session it's right there if you go ahead and click on that understanding volume we don't have the session out there yet but you can download today's slides in pdf format right over there at the top there's a link to download the slide so i'll look a little bit later on today either here or on our youtube channel if you like what john presented today and he gave you a lot of really good information go ahead and give the video a thumbs up on youtube we appreciate that thanks
gene i appreciate you and i appreciate what you do for us and everything you do for bar chart another great session today again i hope folks enjoyed it um i want to tell everybody out there you know be safe out there the best of health and the good of all trading
