Page 88 - A Complete Guide to Volume Price Analysis: Read the book then read the market

Fig 8.13 Second Marker – Pivot Low

Now we are starting to build a picture of the price action. Remember we have a position in the market, and provided volume continues to confirm
price, then all is well with the move higher.

The pivot points which are now forming, are our markers to highlight the journey and define the boundaries of the trend. Unlike the trend lines which
most people draw AFTER the event, these are dynamic and created during the price action, and provided they build in a series of higher and lower
levels, then we know that the trend is developing and we stay in our position, provided the volume supports our analysis.

Let me scroll forward now and add two more levels to the chart, and based on exactly the same principle. From our current position, we are now
looking for the market to push higher, off the pivot low, and the next target for us is a second pivot high, and PROVIDED this is above the previous
pivot high, then we are in an upwards trend. Once this second pivot high has formed we are then expecting the market to pullback, but hopefully only
in a minor way at this stage, and on low volume, at which point we are now looking for our second pivot low.

This is duly posted, and provided it is higher that the previous pivot low, we stay in our position, as we are now expecting the market to push off this
pivot low and develop the trend further.

The market continues higher as expected, and now we are looking for our third pivot high, higher than the previous one, which will then define the
upper region of our trend. If this is posted as expected then once again, and I'm sure you are getting the picture now, the market pulls back off this
pivot high and moves lower, to post, another isolated pivot low. If this is higher than the previous pivot low, then we continue to hold and now have
our third pivot low to define the lower region of the trend.

This is how we build trend lines dynamically, whilst simultaneously holding a position in the market based on Volume Price A Solu="8" nalysis and
the fundamental principles of VPA breakouts from sideways congestion, as we can see in Fig 8.14.

Whilst the end result is the same, the journey in creating these trend lines is very different and allows you, as a trader to join the trend at the best
point, which is the start, and not the end!! This is shown in Fig 8.14 below.