Basic Volume Bar Rule We look at the bars of volume. If a bar is the highest or second-highest, or lowest or second-lowest, of the last X bars, it is often indicative of a change in short-term direction. Doesn’t matter if a high volume or a low volume bar, or a run up in price or a run down in price. A high bar can signify the end of a run up or run down as can a low volume bar. For “X” I typically use 13, but X seems to be a function of variance in bar-to-bar volume. The more variance, the lower X should be and vice versa Full Circle Havent seen this published alluded to anywhere else. Fundamentl, nuts and botls to TA

How to use volume bars It must be looked at with respect to price, providing a “narrative” High volume bars give you an indication of a change in short term direction anywhere from 0 to 2, 3 bars back. Low volume bars give you an indication of a change in direction either 0 or 1 bar back. Works on any tradable instrument, and any timeframe. (For futures, uses total volume of all contracts.) Do not worry about holidays, opening X minutes on intra-day charts, volume created by arbitrage or other programs – none of it matters. You look at it in conjucntion with price – it tells you a story, a narrative, therefore about price.

We’ll return to these charts with specific examples. What Ive given you are the basic rules, but there’s certain important pattersn in these Ive found that you want to be on the lookout for.

Big range day on a high volume bar If it closes in the lower / higher 1/3 rd (?) of range, you can look to be a buyer / seller at a lower / higher price the next bar(s)

High was your stop and reverse since it should nto penetrate the high based on the close.

Note here it closed in lower part of range and traded below

High volume reversal bars Shouldn’t just be a marginally closing price change, should be substantial. These tend to be extremely powerful and reliable. In a protracted short-term trend you should wait for this pattern. Or at least a very decisive Big Range day on a high volume bar (like the previous pattern). High volume reversal bars Bars with high volume that go opposite the prevailing short-term trend, on the first or second bar following a high / low. Sometimes these are outside days, sometimes not, but they are usually very reliable.

Bull Horns and Bear Horns Tend to show up in congestion areas after a protracted run, The first bar alerts you, but it’s early, though in the time window of a little before on big range bars, the second one, let’s you be quite certain it is the end of the run. Bull Horns and Bear Horns Two high volume bars with an intermediate (or two) bar(s) signifying a short term top or bottom.

Bull horns on high volume…. and on low volume Bull horns on high volume….and on low volume. (again, usually low volume is more powerful and more timely)

Narrow range days on low volume or high volume Narrow range, not necessarily inside days. You quickly know if these are not going to work out. Especially telling if they are on high volume (kiss of death days) Narrow range days on low volume or high volume

I love the S&P mini. Best signals for equities. Look how this signal failed recently, twice, but you can immediatey find out.

Tend to be very rare, but they tell you a lot. Don’t believe volume signals in opposite direction now for awhile (bull horns at end for example) High volume breakouts Generally are Upside breakouts only. The first few bars differ from ordinary high volume days in that they are occurring on a chart breakout.