The clue is in the Volume…

XBP Price Bars indicator, working in a ticks chart, displays in an easy way where bigger than usual volume happened. In the past I showed you how to use this indicator during day trading to spot the places where either big volume enters or exits the market. There is a secondary use for this indicator which is also very useful.

In highly aggregated tick charts, the number of bars big high volume (blue bars in the screenshot) are greatly reduced to few during the day. You can mark those levels and expect to become support/resistance (S/R) levels in future days. Let’s see the week of 10th to 14th of September 2018 as an example:

20180915_01

Note: Monday has less bars in the morning session due that the XBP indicators require few historical data bars to start displaying signals.

As you can see, the detected levels, preferably during the morning session, have a S/R effect on future days. Obviously these levels are not 100% effective 100% of the time, nothing in trading is. There is also a margin of error, price will not stop perfectly at a previous level but around it. You could add a range of 2 or 3 points above and below the detected level for a candidate S/R area instead of level. Trading is more organic than some of us, me included, then to understand it.

When it comes to strictly intraday trading, having a screen with this highly aggregated tick chart, each bar is 6765 ticks, can give you a clear clue of when high volume enters/exits the market. Taking the same chart as before but detecting the ideal entry and exit points for each day (except Monday due to the fact that ThinkOrSwim doesn’t provide more than 5 days of data for tick charts):

20180915_02

You can see how you could have easily traded from “blue bar to blue bar” in the direction given by the XBP Volume Ratio oscillator indicator. Note that, as said before, nothing in trading is 100%, on Thrusday we didn’t have good signals, not bad neither, but doubtly any profit would have been done that day. Anyway, as discovered in the post about daily statistics, Thrusday is the worst day for day trading, so you shouldn’t even expect much of Thrusdays 🙂

Getting the XBP Indicators

If you are interested in using the XBP indicators, simply send me an email at xbptrading@gmail.com and we will complete the transaction using PayPal. The price of all the indicators for a life-time license is of USD 100, just 2 E-mini points 😉

PayPal link: paypal.me/xbptrading

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