Page 97 - A Complete Guide to Volume Price Analysis: Read the book then read the market

rogue, and even though he has attracted many detractors over the years, I for one will always be grateful for the day I happened to stumble across
his article in the newspaper. Volume to me just makes sense, it i ^s bs logical, and is the only way I believe that you can truly see INSIDE market
behaviour, manipulated or otherwise. All the charts used here are taken from either my NinjaTrader platform, or my MT4 brokerage account.

My second reason for the book is to explain this methodology in a straightforward way. The markets may be complex, but they are not complicated
or difficult to understand, and if you are prepared to learn and study the charts yourself, you too can become an expert in VPA in no time. There are
no short cuts, but just like riding a bicycle, once learnt, you will never forget. As I have said before, I do not believe any software program can do the
analysis for you. Trading is an art, not a science and the subtleties and nuances of the market are simply beyond the capabilities of machine code,
no matter how sophisticated the program. And the principle reason why trading is an art, is because markets are driven by people and their money
and underpinned by fear and greed.

Therefore, as we near the end of this book, I'd like to to through some examples from various markets, and from different platforms. All have
volume. Some is actual volume, as in the cash markets and the futures markets, others are from the spot forex market. But all of them have one
thing in common. The application of VPA is identical in each case, and where we have VAP data, I have added this as well to complete the picture.

And I would like to start with some examples from the US stock markets and the first chart is the daily chart for Honeywell (HON) which if Fig 10.10.

This is a nice example which teaches us several lessons on this one chart. Whilst this is a daily stock chart, our VPA principles still apply,
regardless of market or instrument.

Fig 10.10 Honeywell (HON) Daily Chart

The stock sells off, moving lower, and initial weakness is signalled by the small shooting star candle, which is then confirmed with rising volume and
a wide spread down candle. So no anomaly here. This is then followed by a narrow spread down candle with higher volume than on the previous
bar. This is an anomaly, and could be stopping volume. The following day, the market closes with a hammer candle, and high volume again. We are
now looking for this stock to pause at this level, perhaps move into a congestion phase, or perhaps see more accumulation before a breakout and
move higher.

In this case, Honeywell moves higher immediately on the following day with a gapped up open, but the volume is only average. The following day the
price spread is narrow, and although higher on the day, the volume is falling away. This is not a good sign and suggests weakness. The stock is
possibly not going to move too far, and does move into a congestion phase. However, towards the end of this phase we start to see daily selling
pressure absorbed with a narrow spread down candle and high volume, again an anomaly. After all, if this was selling, then we would expect to see
a wide spread candle, and we haven't. We have a narrow spread candle, followed by another, three candles later.

The selling is being absorbed, and we are now waiting for a potential break out from this region, which duly arrives. Rising volume with wide spread
up candles. A positive signal that the market is bullish. We also have a nice platform of support below. The market then moves sideways again at
the higher level for two weeks, sliding lower, but note the down candles. The selling volumes are falling all the time at this level, not a sign of a
bearish market. If t c maeeks, slhe stock were truly bearish then we would expect to see falling prices and RISING volume. We have falling volume.