Well on the face of it, today was certainly no exciting day. With under a million minis traded (including the overnight Globex session) and a day session range of just 8.75 handles (1118 low with a 1126.75 high), most people would think there was no way to make any money today. Luckily Volume Spread Analysts are not most people! In fact, today was just as profitable as any other day, and I’ll show you how.
Starting with A, we see strength entering the market with very high volume on down bars closing off their lows, and the third bar also having high volume and closing near its highs. While this may seem like bottom picking to some (and maybe it was), but with the strength coming in with the preceding bars, having a bullish view for today, my moving averages getting so stretched out, and the parabolic SAR confirming an up-move, B made for a nice no supply entry.
I generally look for 1.5-2 points on my trades, which we get with a trade on B. At C, we start to notice supply hitting the market (high volume, closing in the middle), which would make me wary of taking a test bar at D. Depending on your stop loss, risk tolerance, etc. that may be a trade you’re willing to take, but that is a decision each trader will have to make for himself/herself. With potential weakness at C, I decided to let it play out.
We end up selling off a bit until E, which marks a nice reversal. This is actually pretty common – what happened was that since we had that high volume on the last (green) bar marked at A, the market came back to this level and tested for supply. As you can see, we sell down to this level on light volume and then at point E, we get heavier volume as the market bought it back up. While not a trigger on its own (at least for my trading style), it is a confirmation of strength.
The next entry comes just several bars later, at F. This is your typical test/no supply bar. While we do trade sideways for a bit here (likely due to the high volume at C and wanting to make sure the supply was gone), we have a quick shakeout to the downside before we jump higher for another successful trade.