Thursday, September 16, 2010

RIFIN battle today - how to read 60 mins volume charts?

Woww... what a nice day....

Generally our figures are pretty o.k., and facts vs forecast seems fine with a small difference.

In my forecast I thought there will be a bigger fight with more up and downswings.
I feel a fight will come soon, but not now. It will start from higher level.

Before I am leaving and have some beer  I'd like to show you the nice battle on RIFIN today.
RIFIN (here in MV SPX financials) is in a constant focus. Why? There is no market improvement without banks. Love or hate it, but this is how our economy works.
I am sure that you remember for my similar post. If not, then please find link below.

So, let's see what happened today?

What we need to do is to understand the basic characteristics of volume cycles.

As you can see, a normal cycle lasts from a sell/buy cross till the next cross. C5 is a typical textbook sample.
Unfortunately the drawing capability of MV is very limited, so I make my charts in a paint program has no straight vertical lines. All the lines between cycles should be vertical.

On 60-mins chart we can identify a cycle using the volume based sentiment indicator (second from bottom if you dont remember. About cycles etc. please read my corresponding post

Please observe sentiment indicator. Normally a cycle is completed when it's value is 50 on 60-min chart.

We the following type of cycle characteristics:
-single mirror (symmetric)
-double mirror (symmetric)

These characteristics are valid for bull and bear as well.
Please observe the strength of bear cycle in bear market (cycle 1 and cycle 2) and strength of bear cycle in bull market (cycle 8) (strength indicator is the 3rd from bottom).
This is the reason why short-term shorting is not advised in bull market and going long short-term is mainly not profitable on bear market. Simply, there is no steam in contra volumes.

Back to our hero today, RIFIN, we start with C7. It was a double asymmetric cycle. C8 started on 15th of september and seemed to be eliminate in 8-10 trading hours (strength is above signal for 16th EOD, oscillator in neutral territory, sentiment is around 40 EOD). Nice setup for a bull continuation. 2 hours before EOD 16th there is a bearish attack with a weakening power eliminated bull volumes and made a pull back on sentiment. As we see, today morning this volume attack manifested in prices, with a small, exhausting price fall effect.

For EOD today buying volume could reach selling volume level and selling volume remain almost steady. (follow 5th indicator from bottom, the green and red lines)
What would you predict if you were asked?

Last 2 hours had a selling attack again, so tomorrow it will most probably manifest with a quick downward fall, then, if buy volume continues it will build-up eligible volume to push prices higher into the positive territory. Did you observe the positive price manifestation in parallel with bearish attack?
Yes, I am sure you know it already, it's a heads up signal for smarts to switch bull, so there is a chance todays EOD bearish attack will have no price manifestation at all.

Taking bull figures on 2 and 1 day  volume charts into account, we can order pretty high probability to this, daily charasteristics: nice up day with some correction after bell.

I'd like to emphasize this intra-day forecast needs almost continuous monitoring, checking figures 3-4 times a day at least and not the main subject of this blog.
The reason I've shown you the fight today is to compare this fight to the famous C3-C4 battle. Lower volumes, less damage on both sides.

Market changed dramatically.

According to the latest figures, gold continues it's parade (3 cycle triple mirror bull on 1-day!). It's starting to be inconvenient me just to sit and wait for some correction. Having a take-off mode on a share or index makes very hard to determine exit point as volume and rather classic TA has not been designed for secular bull. In case of take-off mode, we will use our speculation skills.

So good luck tomorrow, I feel bulls will cheer!

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