Today, I want to dive deep into a concept that can revolutionize your trading approach: letting volume lead the way.

This isn’t just a theory—it’s a practice that I apply live and in real-time, resulting in profitable trades.

If you’re ready to enhance your trading career, understanding the relationship between volume and price action is crucial.

WHY Volume Precedes Price Action

Before we get into the specifics, let’s establish one key principle: volume precedes price action.

This means that significant changes in trading volume often foreshadow price movements.

When you can interpret volume correctly, you gain a significant edge in predicting market behavior.

The Live Scenario Breakdown

Let’s examine a live trading scenario to illustrate this principle in action.

The 7 AM Candle Analysis

At 7:06 AM EST, I noticed an ultra-high buying volume candle. The candle opened at .83 and closed at .87, a narrow four-tick range despite the heavy buying volume.

This discrepancy signaled that buyers were trying to push the price higher, but sellers were absorbing their efforts.

Recognizing Absorption and Market Direction

As the market attempted to move up, it became clear that sellers were absorbing the buying pressure. This absorption suggested that the market, which had been trending downward with lower highs and lower lows, was likely to continue in that direction.

The 8:30 AM Confirmation

By 8:30 AM, the market confirmed this hypothesis.

A new buying candle appeared, but it was only half the size of the previous high-volume candle and managed to close higher.

This indicated that buyers were still being absorbed. The market failed to break above the prior wick, reinforcing my belief that it would push lower.

Executing the Trade

Based on this analysis, I placed a short trade. Here’s the detailed breakdown:

• Entry Point: After identifying the absorption, I entered short.

• Risk Management: My total risk was 20 ticks.

• Profit Targets: The first target was at the prior lows (60 ticks), giving a 3:1 risk-reward ratio. The trade ultimately moved 135 ticks in my favor.

The Power of Hawkeye Volume and Price Action

This trade, which I identified and executed live, was a prime example of how understanding volume and price action can lead to significant profits.

By analyzing these two factors together, you can develop a more accurate thesis about market movements.

How Hawkeye Traders Can Help

At Hawkeye Traders, we specialize in helping traders like you revolutionize their approach.

 

Our proprietary volume indicators paired with price action analysis enable you to interpret market signals accurately and profitably.

Ready to Transform Your Trading?

I encourage you to explore the resources we offer at Hawkeye Traders.

Click the links below to consume more content, and don’t hesitate to reach out to me or my team with any questions.

Our goal is to equip you with the tools and knowledge to capitalize on trading opportunities effectively.  Click here to embark on your Volume Mastery Journey

Happy Trading,

Anthony Speciale

Hawkeye Traders