Wyckoff’s third law on the CAD/JPY 30m

A classic example of stopping volume on the 30m chart for the CAD/JPY with the pair having been under pressure for some time as the rout in oil continues. However, in this example we see Wyckoff’s third law in action, effort and result. The previous candle is wide in spread and the volume is high, so effort and result are in agreement. Then comes the next candle. The spread is narrow, but the volume is higher. Price and volume are now in disagreement and from this we can deduce this is strong buying and therefore we can expect to see a reversal in price in due course. A long legged doji candle follows before the trend higher begins on excellent volume. Now price and volume are in agreement again and confirming this is a genuine move supported by the market makers.

By Anna Coulling

Charts from NinjaTrader and indicators from Quantum Trading

About Anna 2016 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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