V-Swarm Identifies Weakness in CL Trade

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V-Swarm Identifies Weakness in CL Trade

v-swarm identifies weakness

In today’s update, I show a quick crude oil trade where Hawkeye V-Swarm identifies weakness in the trade. This allows me to exit with a small profit and stay out of trouble.

One of the most difficult aspects of trading is knowing when to cut a trade.

Especially when you have seen some profit and it begins to move against you (like it just did for me).

The greed in you wants to hold on to get the profit you once saw back.

Today I talk about how to know when to hold on to that trade vs when to close that trade down and put your money to work in a better opportunity.

V-Swarm Identifies Weakness

You see, volume is a leading indicator. Using volume correctly with price enables us to know the sentiment of the market on any timeframe. So when I saw Hawkeye V-Swarm (volume) showing me weakness in the trade was developing, I had time to adjust my stops and lock in profits in a trade that would have ended in a stop loss. V-swarm identifies weakness and strength in trends, so it can help improve your bottom line.

The Hawkeye Perspective

While in the longterm, the trade would probably work out (and it did), I followed my rules to stay safe and be able to trade another day. Sometimes, “you gotta know when to hold ’em, and know when to fold ’em”. In today’s example, I knew when to fold ’em and walk away.

If you want to learn more about trading with V-swarm and the Hawkeye way you can attend an on demand webinar here

Volume is King When Trading Gold.

Some weeks ago, Hawkeye alerted you to the fact that although all the pundits were talking gold up, the Hawkeye Volume algorithm was showing weakness. Let’s look at the charts.

Weekly Gold Chart
Weekly Gold ($GC) trend.

Chart 1 Weekly Gold

Hawkeye has been short since last November at $1,684 (see red arrow above).

Daily Gold ($GC) chart showing possible entries using Hawkeye.
Daily Gold ($GC) chart showing possible entries using Hawkeye.

Chart 2 Daily Gold

The three red arrows show where you could have entered fabulous trades using the Hawkeye Roadkill indicator. With gold in a strong downtrend, the Hawkeye Roadkill identified three possible entries on April 13, May 17 and June 18 that would’ve generated substantial profits!

The Hawkeye Perspective

The market is in a major downtrend. The next major resistance price level is $1,020. Expect to see a major price move to the downside on high volume followed by a narrow bar with light volume.

Remember: markets don’t continue down on light volume so we must wait to see the above profile then expect an explosive up move form this heavily oversold position.

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Everyone went crazy over Gold, but not Hawkeye!

With the crisis in Cyprus unfolding, every pundit and novice commentator was calling gold to new highs. However, the Hawkeye system was in opposition, as the only true leading indicator — volume — did not confirm. The Hawkeye Volume indicator was built on Volume Spread Analysis, and is quite complex… but we made the display very simple and intuitive, using only three colors to identify the presence of buying, selling or neutral volume in the market.

The power of Volume Spread Analysis is revealed in Gold.
The power of Volume Spread Analysis is revealed in Gold.


Refer to the chart above for the discussion that follows:

1. Although the daily went into an uptrend (green trend dots),
2. notice there was no confirmation of either green buying volume or green trend from our unique Roadkill indicator, showing us what the weekly time frame was doing… neutral volume and red down trend.
3. A pivot low (yellow dot) with 2 bars of buying volume pushes market up 3 bars in an overall down trend.
4. LOW RISK ENTRY: a pivot yellow dot formed, and neutral volume followed by selling volume pushes market down, and it closed down $25.30 on the week.

The weekly volume from the previous week was green, but the close was less than the open showing weak conviction. At the end of the week, April 12, 2013 was a widebar (twice average true range x 20 bars). The close was in the bottom 40% of the range. This confirmed the Hawkeye weekly trend that has been place since November 2, 2012.

Remember the Hawkeye widebar rule: we now expect the market to consolidate hereuntil there is a weekly close lower than this widebar.

This is the power of Volume Spread Analysis!

Forecast for the GBP/JPY

gbp/jpy daily chart
GBP/JPY – Daily Chart

With the US markets closed today for the annual Thanksgiving holiday, focus in the currency markets has centered around the Japanese Yen once again, as money flows continue to move into other currencies ahead of the Japanese elections in December. Both the USD/JPY and several of the cross currency pairs have seen sharp moves higher, with the GBP/JPY one of these, and climbing on the daily chart once again today, following yesterday’s wide spread up bar, which added further impetus to the move.

Following the breakout above the 130.00 price level, the bullish trend is now firmly established, with both the daily and three day trends firmly established. The Hawkeye Heatmap has also returned to bullish, following a period of transition, and with sustained and rising buying volumes on the daily chart, supported by buyers on the three day chart, the outlook for the GBP/JPY remains very positive. Finally of course, Hawkeye has delivered a conservative entry signal this week giving a solid entry for longer term trend traders in this currency pair.

Oil continues to trade in congestion

oil futures chart
January WTI Oil Futures – Daily Chart

January oil futures closed marginally higher yesterday, closing the oil trading session at $87.38 per barrel, having touched an intraday high of $87.89 per barrel, before ending the oil trading session just 10 cents per barrel higher. The current lack of direction for crude oil has been a feature of many markets over the last few weeks, as commodities in general trade in a consolidation phase as we move towards the year end, with the price congestion for oil clearly defined by the pivots above and below this current range.

To the upside, we have two isolated pivot highs, just below the $90 per barrel level, and below, two isolated pivot lows in the $85 per barrel price area, which define the limits of the current congestion phase. The most recent of these was on Tuesday, which is pushing the market lower as a result.

The Hawkeye widebar of early November was never validated, suggesting a lack of downside momentum, with the market pulling back to trade within the spread of the bar and failing to continue the bearish trend, with the daily trend now in transition to white. The three day trend however remains firmly bearish, with no transition as yet, and supported by heavy selling volumes in this time frame.

On the daily chart buyers have returned, but counterbalanced by yesterday’s rising selling volume in a narrow spread day. The Hawkeye Heatmap is in transition from bearish to bullish, but has yet to complete the full cycle, and the key now for the oil market, is whether we see a break above or below the current congestion. For a move higher, the $90 per barrel level is now key, and if this holds then we can expect to see a retest of the deep price congestion in the $92 per barrel area and beyond. A break below the $85 region, could see the market sell of sharply again, and test the $78 per barrel level in due course. As always, Hawkeye will reveal the future direction of the market, using volume as the only leading indicator.

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