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Don,
I have another question and some comments.
Question: You said this was not obv because this does not have to do with
price. How do you determine advancing and declining volume if you don't
use price in some way?
My comment is that, I believe this is an intraday form of obv, IMHO, and a
very interesting use for the technique. I believe that many software
packages provide this indicator. Is this true do you know?
As I look at the attached chart I see two things:
First is the divergence between price and volume which indicates a weak
market as you point out. If you look at the very beginning of the chart
you will also notice another divergence - volume steady while price started
to decline, followed by a large move down. To me this divergence indicated
a change in trend coming. In this case price was the predictor. When both
gave signals the move was on and a strong downturn was signaled.
Second, asside from the obvious divergence and its implications, at the end
of the chart, another possibility exists. If you draw trendlines
throughout the chart they seam to break up or down together. If you draw a
trendline on both the pricd and volume line you will see that they are
ready to both break upside. That is they might break upside, no
guarantees. Now if they do,the signal is completely different. Lets take
it one step further. Say you look at the volume chart - notice that this
low in volume is very close to the previous lows and if you have an upside
breakout then you have a potential bullilsh possibility. In this particular
case you would have to wait for conformation.
My thoughts on s/r are that on first glance, I question their usefulness
(with volume). Divergence seams to be a rare occurance but when it occurs
you can look for a strong CIT. Trendlines seam to confirm the trend, and
when both are in agreement you have a better picture, IMHO.
Have you tried using tick data with this work?
Thank you for sharing you data and ideas.
Kind regards,
Yorker
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