USDCAD and tick volumesOleg Alexandrov
Traders often begin their path in the financial market with experiments within the Metatrader program. Sooner or later, many of them come to the conclusion about the importance of volume indicators. This is a valid argument since the analysis of volumes allows you to use the law of supply and demand and trade in harmony with the true mood (sentiment) of the market.
Then traders ask themselves whether it is possible to use tick volume. Indeed, in Metatrader, a broker provides only a tick volume data. While real volumes are broadcast by the official Exchanges like CME, and sometimes you need to pay for such data.
So – tick volumes CAN be used. Although they differ from the real volumes from the exchange, tick volumes show the activity of players.
Take for example the forex market USDCAD.
1) This is an example of EVRT. Look, the volumes are high, and the progress of the bulls is small. Those who can read Japanese candles will call this pattern a reversal. A long top-shadow confirms the weakness of EVRT, and shows the presence of massive SELL-limit orders (hidden weakness). Starting from this level, we must assume the beginning of the distribution phase in this market.
2) SLKT. False breakdown of the previous local maximum of the day. This indicator (3) shows stop-loss levels. They were knocked out. A large surge (4) in volume indicates a high activity inside this candle. But if this activity was genuine strength, why did the next two candles close lower? This is a bearish indication.
5) Here we have an attempt to grow candles in the SLKT area. But the volumes are low. Most likely this is a weak demand ( ND. )
You see, tick volumes are capable of telling a story. And the summary is this – bears so far control the level of 1,317. To overcome this resistance and continue the up-trend started in the candle (6), the market needs a Shakeout. Very likely, with a false breakdown SLKB of the stop loss level (7). So far – a little more negative than expectations of rapid growth.
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