[NOTE] This article about the YM chart was written by Nigel back on March 7th and published after March 7th.
If we look at the monthly chart on the Dow (YM), you can see I have placed a cyan arrow at a key point on the chart. Please note the Hawkeye trend dots, and how they are all rising with equal space in between them, which indicates the market is still in an uptrend.
However, if you look at the Hawkeye stops (the little green crosses on the chart underneath the trend), you can see that they’ve gone flat. This indicates the market is in congestion with no momentum, and we will need more volume to show to continue this trend to the upside.
Now, let’s look at the weekly chart, and notice how I placed a red arrow on the bar that occurred at the end of last week, the week that ended March 6. You can see that although that is a down bar, the volume indicator (second from the bottom), is telling us there is no selling volume going into that move. And in fact, the most important part of that bar is it is still straddling the Hawkeye pivot extension line (which is the yellow line that comes off the yellow pivot dot).
So, this trend is still intact, with the price dropping down to the Hawkeye trend dot, where it finds support.
Finally, if we look at the daily chart, you can see we have two arrows. As indicated by the top arrow, the price has come down and broken through the pivot, but you can still see how part of the magenta wide bar is still straddling the pivot.
So, I don’t consider that a full breakout yet. And, you can also see that it went right down, and the Hawkeye stops held it, so the market is still in congestion. However, if you look at the volume below, you can see that we have a yellow dot on the volume, indicating that it is high-volume.
This coming week is key to determining what new trades to take. But, let us remember an important rule about wide magenta bars. About 80 to 85% of the time, the next bars close within the range of the magenta bar. So, on Monday, if we see a close within the magenta bar, we know that we have gone into congestion, and thus, we will need to wait four bars. So, we will have to wait until Thursday to see if there is a down bar, which will then kick in the volume to the downside.
So, be patient this coming week. The price movement will reveal itself Thursday or Friday.
Lastly, if you haven’t picked up a copy of the Hawkeye Volume Starter Package yet, please CLICK HERE, and get started using Volume to start increasing your profits today!
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[The red and cyan arrows are for illustration only and do not form part of the software]