The daily chart for the NQ Emini makes interesting reading from a volume price analysis perspective. First, note yesterday’s price action and volume. The price action alone signals short term weakness, and the volume confirms this view. Here we have an effort to rise with no result, in other words, an anomaly of Wyckoff’s third law of effort and result. This weakness is also confirmed further by the price action and volume of the previous day. Here we had a widespread up candle, but when considered against other candles of similar spread, the volume looks average and out of alignment for such a large move. In this case, price is being marked up without participation.
Next, consider the longer-term outlook and from a technical perspective, this is likely to be hard going. As we move through 8200 volume on the histogram to the right of the chart increases dramatically as it builds towards the volume point of control itself at 8750. In addition, we also have solid price based resistance immediately above the 8800 region and denoted with the red dashed line of the accumulation and distribution indicator. This is a level that has been tested four times to date and therefore extremely strong. All of which means for any rally to continue further will require rising and strong volumes to drive the index through the next 1000 points, and judging on the previous two days, this seems unlikely in the short term.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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