Happy Saturday traders.
I trust you’re enjoying it and will have a pleasurable long three day weekend away from the market. I know I sure will, it’s been an incredibly busy start of the year for the Society and we’re excited for the future. We’ve been adding content at an extremely rapid clip, thrusting the techniques and methods used for Market Sorcery upon the masses.
So far so good, as the message seems to be getting through to the audience, even if not as quickly as I had desired. Little by little, chart by chart, one concept at a time, we will show you how these concepts and principles work in real time and lead to abundant gains. I am trying not to overwhelm you with information, but rather trickle it down upon you, one technique at a time, sprinkled with a little real-time Market Sorcery to drive the point home in dollars and cents terms.
This will continue until I have created an army of successful Market Sorcerers who simply enjoy life in abundance and peace, spreading joy and wealth across the lands.
To that end, and to put a button on my rambling, lets discuss the next very important method used for extreme Market Sorcery, here at the Society: Volume Profile Analysis.
Let’s use a stock that we currently have under review, and describe why the volume profile suggests that a long trade may be in order here.
The ticker is AAC
We first noticed this chart due to the patterns that had been setting up and playing out in the stock once it stopped making lows in August of last year.
Notice how the stock has made a series of consolidations here, creating a “base” of buyers to work with for a potential trend higher from here.
Along with that is what could be considered a large triangle shaped consolidation which appears to possibly be in it’s final stages before potentially leaving the consolidation to enter “price discovery”.
Now comes the tricky part. Which way is price going to be “discovered” out of this consolidation? Put another way, is the stock going to break up or down from this consolidation?
Given we have already stated that we feel these recent series of consolidations bode well for a move higher, clearly our view is the stock will break higher out of this consolidation. But why?
Let’s look at the “Volume Profile” to illustrate why we like this stock to break higher from here.
Let’s go over our check list for what we look for in a setup and see how this stock stacks up.
Pattern: Check. We have series of consolidations with higher lows and lower highs, and a much larger triangle formation taking shape as well.
Price: Check. We have prices consolidating nicely near the middle of a range with a solid base below and the pattern appears to be nearing its action point in reference to time.
Profile: Check. As you can see from the chart above, we have a nice base of buyers below with “POC” or point of control just below, and a slowly tapering profile above which gets thinner and thinner as prices go higher. Over 10.50-11 should see prices “get loose” and travel quickly to the next volume “node” above at about 16-19.
There is much more to discuss on this topic and I will be happy to answer any questions in the comments section here. Please do not hesitate to ask anything or just make a comment about the content we are providing here. It is always nice to know that what we are doing here is helping others, and we would love it if you could give us thoughts on this article, or any of the others you have seen or read here in the past few weeks. Thanks as always and please do enjoy your long weekend!
We’ll see you soon with more charts, ideas, trading techniques and much much more!