Locating Trades with Volume’s Vendetta on Price

Simply known as the Hatfields and the McCoys. A legendary conflict that pitted a wealthy West Virginia family against a working class Kentucky Union-friendly family.

Over the course of several generations the feud included beatings, kidnappings and even one romance. The vendettas carried out can only be categorized by one word: epic.

Every day, buyers and sellers are duking it out. When the conflict reaches a fever pitch, or even dies down — it’s all monitored by volume.

You can spot these moments well in advance simply by plotting long-term Volume Rejection Levels and Institutional Trading Levels.

Jilted volume levels that price will never forget

The feud took place right along the border between Kentucky and West Virginia in the heart of the Ohio river valley. The McCoys, originally from Ireland, were not fans of the Hatfields, who fought for the Confederates during the Civil War.

Like a long-standing feud that won’t go away, volume holds a grudge in every market that price can’t ignore. Incorporating a long-term perspective on volume will reveal price levels that deliver as support, resistance, and reversals.

Volume serves as the market’s voice — or more specifically, the institution’s voice — when it comes to market value. When volume spikes, the institutions like the price they’re getting. When it dips, they are pushing away from the table.

Love, hate, or anywhere in between, you need to know what volume thinks of price at every level.

Looking back to understand volume’s feud with price

This feud, referred to as a ‘war’ by many, lasted almost 30 years, running from 1863 to 1891 along the Tug Fork and Big Sandy River. Talk about a grudge that wouldn’t go away.

When looking for volume levels that price will respect, it’s critical that you start with a perspective that goes back at least 300 days. This will give you a sense of the market’s overall view of overbought and oversold conditions. It will also show big news events that may have made price spike or drop in perspective.

Picking out the extremes, specifically high volume and low volume nodes, will provide levels at which price has reacted. Simply pull a long-term volume profile set at 300 days and you’ll be able to eyeball these levels quickly.

Peaks and valleys in a long-standing feud you need to monitor.

Like the Hatfields and McCoys, when price reaches these levels, it can’t forget the past. Looking at the ES chart here, set at 240 minutes with a 300-day look-back, you can see how price responded at both high and low volume nodes.

Reliable entry opportunities from both sides of the river

As if being on opposite sides of the Civil War wasn’t enough fuel to start a rift, you can also mix a little class warfare into the feud. The Hatfields were more affluent and politically connected, thanks to a timbering operation Devil Anse Hatfield started (yes that was his name). Of course both families were involved in the manufacturing and selling of moonshine.

Thankfully, both high-volume and low-volume nodes can be traded the same way since the market responds with reversals on both. Because of the extreme activity that took place at high- or low-volume nodes, price won’t likely breeze right past.

You can quickly plot these levels on your chart and use them as locations to monitor for reversal entries. In conjunction with Order Flow Sequence Tracking, you can watch for tapering activity and monitor a reversal entry.

Translate the war with volume into reversal entries you can count on.

Using our same ES example, you can see how price naturally respects these levels, and have confidence in them as candidate entry opportunities.

Spotting clandestined exceptions you need to steer clear of

Of course there are always exceptions. There was actually a forbidden romance that blossomed between the two families. That had to have been an interesting conversation when this little tidbit of news came out.

When plotting reversals, there’s always the fear that they won’t be respected. That somehow the boundaries will be crossed and price will shoot straight through, leaving your entry with a broken heart.

Thanks to Order Flow Sequence Tracking Intelligence and Volume at Price, you’ll know if the buyers or sellers driving the movement are on the run or losing steam. Simply watch for imbalances and steer clear of entries that are in the middle of the Value Area where the most volume is currently taking place.

Even if price shoots through a high- or low-volume node, you can be confident that it will be respected in the future when it returns.

Profit from the sidelines while volume settles the score

The feud reached its bloody peak in 1888, in an altercation now known as the New Year’s Night Massacre. A gang of the Hatfields attacked the McCoy cabin in the middle of the night. Children and their mother were among the victims, and the law finally decided it was time to get involved.

When looking for entry opportunities, you don’t need to wait for anyone to intervene. Simply use the Volume Composite with a 300-day look-back to determine exactly where volume has backed away from price. Using the line view for each node, zoom in and mark the ‘reverse C’ or valley shapes for the lowest points.

Back out and see how price has responded to each of these levels. Where you’ve seen strong, accurate reversals — which should be many of the nodes you’ve marked — carry those lines to the rest of your charts.

Let the Hatfields and the McCoys of the market duke it out. Simply profit by keeping track of the feud with volume.

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