CF industries with the stock ticker CF presents us with the mirror image of stopping volume which we saw on the previous post for Bristol Myers Squibb, and once again it is the anomaly of volume and price which reveals the truth behind the chart and tells us where the price is likely to be headed next. And of course, the opposite of stopping volume is topping volume.
In this case, we have seen the stock rise steadily from $44 per share before moving into a congestion phase at the $60 per share region as denoted with the yellow dashed line. During the middle of November, the stock picks up the bullish tone once more and advances towards $66 per share and beyond at which point we see the candle develop on the 18th of November with the associated volume. Note how significant the volume is when compared to that which has preceded it over the previous week. It is almost double, yet the price does not reflect this and while it is an up candle, it is well below what we might expect for such an inrush of volume. This is Wyckoff’s third law of effort and result in action. The result, in other words, the price move in the session, should be in agreement with the effort which has been input, namely the volume. So what is happening here? Again in simple terms, the market makers are selling into weakness as the market is not receptive to higher prices. Those buyers who are there are the latecomers who are buying on the fear of missing out, (FOMO) and the market makers duly oblige by happily selling to them, clearing their stock, before moving the price lower. And once again, a nice price waterfall develops on rising volume and it’s back to the VPOC once more.
By Anna Coulling
Charts from NinjaTrader
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