Classical Technical Analysis Using Dow Theory

Yes, the third phase is the excess phase, where in this phase the followers enter the market after seeing a strong trend in the participatory phase (second phase). Often in this excess phase, followers who are late in entering the market will experience loss because in this phase traders who enter the market in the initial phase have started to distribute (on the upward trend) back the shares they bought or accumulated (in the downtrend) back shares that have been they sell in the initial phase which results in a price correction.

5. Relationship between Volume and Trend

Dow said, volume is one of the important components in the movement in the market, in the bullish trend, it should also be followed by increasing the volume and so when the correction occurs, it should be followed by a decrease in volume.

Volume in market movements, shows the participation of the public (trader) and at the same time also describes an increase in market confidence in a stock when there is an increase in prices accompanied by an increase in volume on the stock. When the bullish trend decreases in volume, it indicates there has been a weakening in the trend and investors have been prepared to take profit which can make a correction move or even a reversal next time.

In addition, the volume also illustrates the strength of supply and demand for a stock as a mirror of the strength of buying interest and selling interest. The upward trend which is still followed by increasing volume or at least followed by stable volume, indicates that there is still more demand or buying interest in a stock.

However, Dow said the volume was not used to predict the direction of the trend, but was used to confirm price movements, "Volume must confirm the trends". He also reminded that without being supported by the volume of volume movements that are in line with the trend of price movements, we do not have to trust the direction of the movement of the market. It can be concluded that volume can be used to measure whether the trend will continue or will change.

In post # 34 above, if you read carefully, I have given the link, if it is difficult, can also be accessed at this link http://barchart.com/

How:
1. Click the future tab
2. On the left side box, click currencies
3. Select the desired currency (select the contract in June 2011, for example the Euro symbol E6M11) click the chart in the link column (the link column is on the far right)

Next for setting the chart, do the following steps:
1. Symbol E6M11 (Euro) >> Style = Technical >> Template = None >> Frequency = Daily Nearest >> Time Period = 6 months (may be more) >> Date Start and End = Clear >> Size = 900 by 450> > Scale = Linear Scale >> Bar Type = Candle Stick >> Volume = Contract Volume >> Study Size = Large >> Add Study = Commitment of Trader Line Chart (Other indicators can be needed)

2. After the settings above are finished then click Draw Chart

The result and a description of how to see the volume as shown below



If you need another currency, you can just choose the symbol: Pound = B6M11 >> Aud = A6M11 >> Cad = C6M11 >> CHF = S6M11 >> JPY = J6M11 >> NZD = N6M11

Note: For volumes besides being illustrated in the form of bar graphs at the bottom of the chart, there are also figures in the bottom left of the chart.


I hope this helps

Please read again carefully and slowly post # 34 and post # 38 above, so that I do not explain it repeatedly, in those two posts I have clearly explained it. Thank you...

The key words are:
- Divergence = The direction of price movements and the direction of the opposite volume movement, then when this condition occurs, a reversal of the price movement will occur immediately. Observe the bold sentence above.

- Convergence = The direction of price movements and the direction of movement of the volume are the same, if this situation still occurs, then price movements will continue in the same direction.

If when the price at the level of 1.59xx is below the volume of 90,000, it means the direction of the volume movement will be the same as the direction of price movements, both moving downwards, because at the first time a price correction declined from the level of 1.64xx in volume of 90,968. Conversely, if it turns out the volume is above 100,000 when the price reaches the lowest at the level of 1.59xx, it means that there is a divergence between falling price movements while the volume moves up from 90,968 to above 100,000, thus the correction will be finished and prices will move up again. In fact the volume turned out to be over 100,000 so the correction was completed and prices rose again to this day.

With these guidelines, we can make a decision to enter when there is a signal that a reversal will occur, that is when a divergence condition occurs.

But keep in mind, this is only one component of the analysis tool, there are still other components that will still be discussed.

to find out the price correction how to pack (in what condition) ... if in the above conditions there is a decrease from point 1.64xx 3 consecutive candles, .. after that there is a disvergence. in this case for the exact time we are looking for a formation candles similar to this, in the sense that they do not apply to sideways conditions, for example candle 1 up, candle 2 bears continue up again ... etc. and for TF, which is used well, how many sirs? can it be used for small TFs? explanation please.. thanks ..

while the post is still fresh ... what about the impact news on the movement of the pair and its volume, sir? except if there is no news ... we can still use the fibo benchmark or line resistance support ... (which is more relevant to the thread) sorry if my question came out a little ...

Dow says, "price movements reflect everything (Price Discounted Everything)". Whatever information and news develops has been reflected in price movements, even Dow said, "the most important thing is, not what can cause prices to move now, but what reactions might occur to current price movements.

But we are not Dow, so am I, not as far as the nail of Charles H. Dow. Like it or not, in fact when the news comes out, prices often move regardless of the direction of the trend, as well as the volume becomes as useless, but often too, if the direction is contrary to the trend supported by volume, after that the price will move again according to the direction of the trend.

For those who intraday treding will be a problem when its position is contrary to price movements after news, and it is not a problem for those swing or short term trading who hold positions for days in accordance with the trend direction, because price movements in response to the news still cannot change direction major trend movement. .