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    23 views31 pages

    4 Green Candle Trading

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    Nicolas

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    of 31
    When trading breakouts, one challenge is to find charts that will continue to ‘move in your favor. Here’s one pat tern that could help you identify those strong moves. after you enter your trade. A favorite strategy used by experienced traders is to look at the ratio of green to red candles in recent days’ trading for clues of the underlying technical trad- ing strength. ‘This month, Il demonstrate how to use a simplified breakout pattern where yom enter after four daily green candle ‘ays in a row have been observed. This ‘canbesaneffectivestrategy because when buyers areconsistentlyinchargeofprice action for four or more days in a row, price will often continue upward ‘by Ken Calhoun ‘our biggest challenge in swing. wading breakouts willbe to find ‘SWING TRADING FOUR-DAY BREAKOUT ‘STRATEGY ‘This strategy is easy enough to under- stand: You visually sean for charts that are ina clearly defined uptrend in which yousee a sequence of four ormore green ‘candle days in arow. This tells you buy- ing pressure is especially strong and is likely to continue. ‘Asa former corporate statistician and ‘quality engineer, one thing T learned ‘early on was to look for exceptional “outlier” data signals. Similarly, when it comes to swing trading, you should always be on the lookout for extremely strong breakout patterns that work out ‘most of the time, using price action for ‘momentum trade entries. STEP-BY-STEP ACTION PLAN Here's how you can start using this price-actionbreakout strategy with your swing trades: [TRADING ON MOMENTUM | Swing Trading Four-Day Breakouts 2017 WINNER RO ee nS Winner 15 years in a row! ‘Step I: Visually scan for stocks in the ‘$20-$70/share price range that are in uptrends and have a recent sequence of four or more green candles in @ row on a 90-day daily candlestick chart. You can see this type of pat- tern illustrated in the chart of Weight ‘Watchers International Inc. (WTW) in Figure 1 Tle Meret ait trading systems in Ue) without coding ‘Step 2: Seta buy stop order at $0.50 above the high of the highest of the four candles seen in the series. Step 3: Use an initial $2 stop (and trailing stop) for all swing trades aay AES Ey AY ‘Step 4 (for experienced traders): ‘Add to winning trades after each new four greenday series is seen. This is to build your position over time (also right, versus uncertain or wrong? This known as postion sizing). technique is effective because it buys into continuous strong momentum. I INSIGHTS: WHY THIS have found in testing with numerous TECHNIQUE WORKS trades that lower values, uch as just two ‘Whenever you evaluate a chart for tech- or three green candles in a row, is much nical strength, it helps to have clearly less consistent and does not work out defined reasons for your entry and exit. ‘What is the price that proves the trade Continued on page 37 Fost Watchers ianatal ine WT ‘ ‘0c day candle ort : ged G7 Seem oka yon [loony now nh FIGURE 1: SWING TRADING FOUR-DAY BREAXDUTS. On itis 90 NENW Scaled score: 2* (NENW) = IN 2E 2NW Hamilton 1 million hits Themes: hiphop music, entertainment, history, man, Founding Fathers Score: E W, W SE, E NW,E SW,SSW-> S3E 2W 2SW SE NW Scaled score: | * (S 3E 2W 2SW SE NW) S3E 2W 2SW SE NW Day's total score: 2N 28 2NW + S 3E 2W 2SW SE NW IN $ SE 2W 2SW SE 3NW ‘Theday'stotal scoreis then normalizedandconvertedintothe four primary mood qualities. To do this, the inner wheel scores are normalized so the N +S + E + W scores total 100%. The ‘same is done forthe outer wheel scores (NE-+SW +SE+NW= Controlled Vulnerable (nw) (Ne) Expansive Manic (sw) (SE) FIGURE 1: A GENERIC MODD COMPASS. sical, the NoodCompass stool tomessurethe aed behinan event arte meadot agrovprestson apcerise that evrything is somone nto thi whel er come of eght categorie. N Substance Identity Emotional Rational WV suitve Based Fact Besed Energy Activity s FIGURE: THE FOUR “NNER WHEEL” CATEGORIES. Thofecssictoucatgoros ‘mate al vo poartis or opposites Every eventand aver ame canbe poted 1 alte smo of noch versus su and eat vrs Wet Controlled (NW) Vulnerable (NE) Poles courts Diplmatic Government Encouraging 0, past, Frndly Change ot state Domestic Expansive (SW) Manic (SE) Leaders Entortainmont “This Way’ (Grectional) Toorology Assertive Young, ute Internatoral Upheaval FIGURE 3: THE FOUR “OUTER WHEEL” CATEGORIES Hire yousee tha second se four calor, also made of two plates, bu morecomplar thane est fou Thy ae based on fou primary archetype, and vpresent he four primary ‘ood quale. (ober 2017 * Teh Anal af STOCKS & COMMODITIES + 17 Notice of Class Action Settlements Ifyou transacted in Euroyen-Based Derivatives' from January 1, 2006 through June 30, 2011, inclusive, ‘then your rights will be affected and you may be entitled to a benefit. This Notice is only a summary of the Settlements ani (available as set forth below). ‘The purpose of this Notice is to inform you of your rights in Ccomection with two separate proposed setilements with Setling Defendants Deutsche Bank AG and DE Group Services (UK) Lid olleetively, “Deutsche Bank”) and with Setfing Defendans JPMorgan Chase & Co., PMorgan Chase Bank: National Association ‘and LP, Morgan Securities plc (colletvely, JPMorgan”) the actions, tiled Landon Mzuho Bank Lid, etal. 12-2v-3419 (GBD) (SDNY) ‘and Sonierra Captial Masier Find, Lid, et al. ». UBS AG, etal. ASMA2 where MAI = Average(fear Jen) and MA2 = MAL, two days ago. We will wait fora close below a five-day moving average. 3. We will exit if MA1the five-day average plus one true range. 4, We will have to set a length to MAL (more on that later). ‘The chart in Figure 2 shows these rules inaction. Youcan look ata length ‘between five and 10 days and pick the cone that seems most reasonable and ‘walks forward. Ihave chosen eight but you may choose a different number. ‘The hard partis getting over periods of huge volatility explosions. If you used VIX by itself you'd be buying a lot of crashing bearmarkets.Butifyoudeflate the measure by volatility (ATR), such disasters can be avoided. In Figure 3 you see the equity curve for the past 13 years. Note that this is a rough system with no stops. You could sap 500 (atures) ns dan Ki i" FIGURE 1 MEASURING FEAR neato measur erisby wing te VKindex. Tint burg nar ‘ance onthe SAP 500, Noiow the VIATR rises when the marke fal = a any "iy " is = ae = =f me =" " Ml (* ee = hyn Hd, yh ll, ‘Ve FIGURE 2: BUY/SELL RULES BASED ON FEAR, von you stain ras uh bay won eas of fearisabovea moving avorago and sll when one moving averages below encth” or oer specticconons ‘are met, you can visual see how wel heres work they dont, you can aways eek your parameters. ‘wait formore severe conditions to enter ‘but it proves the efficacy of the approach. Yes, the system didn’t have good results during 2008-2009, but that’s to be expected given that this isa long-only system. WHERE’S THE PAIN AND SUFFERING Tilnow consider another definition of fear. What scares people ‘and frequently forees them out of long positions? |, The amount the market fell on any given day rela- tive to volatility. I measure the average number of true ranges (the close of yesterday — today’s ow). T want to see stops taken out by a low so that any subsequent rally will be missed by many participants. ‘Tothat, Iwill add the numberoftrue ranges the mar- et fell, intraday, compared to yesterday's close. 3128000 508 Tanto sanz ver aaa FIGURE 3: EQUITY CURVE OF THE BUY/SELL RULES. During 1-yearperod, sn you caso the system prormedrlatvaly wel, exept or afew drewacwns. (ber 2017 # Tech Anas 9f STOCKS & COMMODITIES + 23 ey NE ah i few The chart in Figure 4 shows ‘maths of measuring fer, you aly to getter rests. 12500000 9875000 250000 3125000 3125009 50s Taso anee 11914 taeane ese FIGURE 5: EQUITY CURVE OF COMBINING TWO NETHODS. Youcancoethere have been petods of drandowns but veal he perfomance was postive. ‘rscc00 582500 ss7s000 2187500 87500 08 nie atane sonena sores want? azure taint FIGURE : AND WHEN THE PARAMETERS ARE MODIFIED... Heres howitous ange the equity curve. Rests are impressive, with nly afew dranowns. 24+ c1sober 2017 + Teall Anat of STOCKS & COMMODITIES [FIGURE 4: WHAT SCARES PEOPLE AND FORCES THEM OUT OF LONG POSITIONS? By combining two diiron the average of #1 and #2, The combination performs better than either one used individu- ally, How many days should you use to ealeulate the pain? Five is my default setting but a walk-forward test on the S&P contract chooses numbers between two and seven, The level ‘you select as an entry threshold will depend on the length of the lookback period. Ifyou use seven days then a level of 0.2 ‘will work. If you reduce the lookback to four then you need to get above 0.3. Here are some rules: 1. Buy ifthe pain index is above an entry level 2, Sell ifthe pain index goes below that entry level. ‘That's. fee! like Ishould have more rules. Youcanchoose the length and levels that suit your needs. The equity curve for alookback of four days and an entry level of 0.3 using 100 contracts is displayed in Figure 5. ‘The results are attractive considering there have been many painful pulibacks, bear markets, and missed trends. You could, of course, use stops and trend filters (as used earlier in this article) o reduce drawdowns and catch some of those trendy moves. Either or both exits can be executed if the market moves away “significantly” from the opening price. Try that out as an improvement but beware—you are adding another vari- able that will make performance look better in the past but is harder to know what the right level will be in the future, T would also advise adding a two-true range trailing stop 10 the pain trades, COMBINING THE TWO METHODS ‘There are different ways to put the two methods together. 1, Rather than just use the pain index asa hurdle with the MA spread condition, try using the pain index an input to determine how many contracts to buy. Instead of always buying 100 contracts you could buy 150 contracts 2. You buy the market if MAI>MAI and either pain>thresh or close What your stocks are really worth > How safe they are > Whether to buy, sell or hold AE Git Visit www.VectorVest.com/SC tion against it. That way, I am always receiving cas “But what happens ifthe share price keeps on falling?” I asked. “You are losing on the share price.” “I will only be losing on the share price ifT sell the share,” he answered. “As long as the share is dropping, [sell covered calls and get my cash at the end off each week: "And if the share starts rising? What do you do then?” “Well, when the share starts rising, I will hold the share, hoping that it will reach the price I was assigned at. I may ceven sell covered calls at that price. That way Tam receiving ceash every week. When the share price reaches the price I originally paid for the share, Twill then sell the share but only if my charts tell me to sell.” I shook my head. The strategy sounded too simple. “What about the greeks?” T asked. “Don’t you take them into account?” “With weekly options, you can ignore them,” he answered, “If you remember the chart ofthe greeks, you will see how in the last days of a monthly option, the ‘greeks no longer matter; the chart flat- tens out By this time, wehad finished ourcofive. He dropped me at my house, my brain still puzzling over what he had told me. Can trading options be made that simple? ‘There must be @ catch somewhere. I de- cided to start paper trading his strategy lover the next few weeks, texting him al- ‘most three times aday for advice.Tended up being surprised at the results. 1 Was TR. oPtio ‘Three weeks Inter, I placed my first real trade, and sold a naked put on the ‘VectorVest analyzes, sorts, ranks and graphs over 23,000 stocks daily for Value, Safety 1d Timing and gives a Buy, Sell or Hol EN VectorVest recommendation on every stock, every day. Direxion Gold Bull ETF (NUGT) with a strike price at east 10% below the actual share price. I was happy to pocket the ‘money, and, atthe end of the week when the option expired, T was pleased that T had not been assigned, although to be ‘quite honest, had I bought the share on that Monday and sold it that Friday, I would have made more money than T had trading the option. I carried on trading like this for a number of weeks, very .OOKING AT INTRADAY CHARTS. Here yu so the 30-minuo,15-rinut, and 5 minut chars «Deen Gols Ber (DUST). When al tree charts are in buy mode, consider ita buy signal. Sia, at chars a ne mode coker sel signal, (ber 2017+ Teh Anal af STOCKS & COMMODITIES + 27 happy with the cash I received for selling the naked pats, but, then greed hit me. I started selling ata strike too close to the share price, and one Friday, the share price fell below the strike price and I was assigned the share. I then sold covered calls for the next few weeks, of course upset at a share that ‘was falling in price. However, for protection against the ing share price, I bought a put slightly below the strike pri (of the call T sold. This was to protect me against the share falling too far. Of course, buying a put costs money, although, the cost was covered by the call I had sold. Having tried this strategy and not being very happy with it I decided that it’s far better to sell the share ata loss, hoping, that the money received by selling a naked put will cover that Joss when the share starts 1 ‘Then I discovered Direxion Gold Bear (DUST) and started selling naked puts on DUST. When the share price of DUST rose, the shave price of NUGT fell and vice veisa. This way, [was always selling naked puts that expired every week, and thus bringing in a comfortable amount of cash. ‘These days I sell puts on NUGT if itis rising, and DUST if that isrising. Yes, [do keep an eye on other shares, but I prefer to trade these two just because they tend to move strongly ‘What about volatility? Well, volatility does affect the price received in buying and selling options, even on a weekly op- tion, so do keep an eye on that. Do I look at charts? Yes. I keep an eye on the 30-minute, 15-minute, and S-minute charts to determine when the time is right to sell the naked put, whether on NUGT or DUST. Sometimes I may even daytrade the underlying instead of ‘trading the option. I will buy the share when the 30-minute, 15-minute, and 5-minute charts are in buy mode and sell the share whenallthreechartsareinsell modeusing the 1-minute ‘chart as the sell trigger. The chart in Figure 1 is of Direxion Gold Miners Bear(DUST) atthe close on Friday July 21,2017, ‘and shows the CM Stoch_MTF and the RSI 4 indicators. The ‘band shown on the chart is the Bollinger Band. Lookingat the CM_Stoch MTFindicator on the 30-minute ‘and 15-minute charts, you'll see that both have given a buy signal andare trending upward. Onthe S-minute chart however, the indicator has given asell signal and is trending downward, will hold the share until the 30-minute and 15-minutecharts, ‘turn negative, giving me a sell signal, and only sell the share, hopefully at breakeven, when the S-minute chart turns nega- tive again after having turned positive, with the CM_Stoch MIF indicator suggesting a fresh sell signal Having had my brain stimulated by the options trading 28 + ober 2017+ Tecnica Aas of STOCKS & COMMODITIES strategy just described, [started looking around at what other strategies there are that I could handle, There of course are ‘many options advisors that offer to teach you options trading via the Internet and I did download, free of charge, some of the books offered, or I spent time listening to pre-recorded talks at their websites. What put me off was that at the end of their presentations they would offer to complete the train- ing if I sent them $499 or some other figure that was never a round figure—it has always isked me when prices aren't n in round numbers, as if the consumer wouldn't realize that old trick. Still, when I came across one option advisor who offered weekly put credit spread strategy, it caught my attention. Is the cost $4997 Yes, but the idea ofa weekly put credit spread attracted me, so I spent many hours sipping a whiskey, with two fingers (he first and fourth) on three cubes of ce, study- ing and eventually understanding the strategy. What is a weekly put credit spread? The strategy I was {aug is to look atthe share price and buy and sell a put. For example, looking atthe share Adobe Systems (ADBE), which closed at $149.52 on Friday July 21,2017, you would buy a put with a strike price of 143.00 and sella put at 145.00 expiring Friday July 28, 2017. The bid must be 0.07 and the ask 0.18. ‘This will yield an annualized return of 189%, Did I work allthis out? No way, Iam not that clever. Ifol- lowed a newsletter that I received via email on Saturdays that listed a number of positions to take. T paper traded these positions for two weeks, and I must say that over that period, Ionly had one loss. Based on the results Of the paper trades, I would say the recommendations were good. Of course, I had taken advantage ofthe free one-month trial. [will only know for sure once I start trading with real ‘money and subscribe to the service. YOU DON’T HAVE TO BE A GENIUS ‘Sonow youknow how an options idiot ike me can startearning cash playing with options. Will [read books or attend classes teaching me what abutterfly oriron condor orany other option strategy name is? Sure I will, and hopefully I may eventually Understand all these strategies and start profiting from them, But in the meantime, I stick with simplicity. Finally, just to let you know, with approximately $10,000 Lam making lose to $2,000 per month selling weekly naked puts. Not bad for an options beginner. Koos van der Merwe has been a technical analyst since 1969, having worked as a futures trader at a stock brokerage firm in Johannesburg, South Africa. In Vancouver, Canada, he worked as an Investment Advisor from 1993 until he retired in 2010. He may be contacted at petroosp@gmail.com. {Tradingview.com $#5ce Editorial Resource Index ex) » Tradersexro. LAS VEGAS NOVEMBER 2-4, 2017 PARIS RESORT ren eon Sse coh et oN un ay to acquire the strategies and tools elite traders are using in EVAR ‘Some of the world's best traders will be attending and speaking pea Gel eee ats eee ted during presentations & panel discussions, attend the arnual ee eae Ea an The interactive Exhibit Hall allows you to investigate, practice, tReet Rey A calla Ace Ae ee a ele LL (Dy Ameritrade (VWestorvest OTradeStation Volume Price Projections An Early Warning System Part 3 In this final part ofa trading system that provides traders with a simple, straight forward set ofrules to help anticipate price trends based on significant volume increases. iree-part series, we'll describe a swing ‘by Mike Slattery ‘you sell me one share of stock and that transaction represents the entire numberof trades for that equity forthat trading day, then the total volume for that day would be one (1). This would represent litle interest and lack of enthusiasm for this stock and its price. FEPPETEE This price is unlikely to fluctuate (beyond this one trade's price change)—it would be impossible to fluctuate, as price cannot change without volume sufficient to cxeate ‘an atmosphere where market dynamics can come into play, allowing for fluctuation of price. In the second article in this, 30+ osiier 2017» Trial Ants of STOCKS & COMMODITIES series, “An Early Warning System,” which appeared in the September 2017 issue of Technical Analysis of STOCKS & COMMODITIES magazine, Ieompared the similarities between the trajectory of a rocket’s path and parabolic movement of a stock's price. Volume is the fuel of this analogy and of the equity markets. How Do YOU MEASURE IT? The irony represented by thisone-share exampleis,ifthenormal daily volume is one million shares, and today’s volume is one million shares, you seea situation where there is no substantive increase inthe interes for this equity over normal daily market activity. Again, the price is unlikely to change dramatically given the interest level has remained unchanged, Obviously, imterest levels can have rapid and often unex- plained changes that could be positive or negative, These changes are driven by @ multitude of events that the trader is [TRADING SYSTEMS| often unaware of and/or has no control over. These include earnings releases, news, competitors’ news releases, economic news, natural disasters and ‘weather occurrences, market industry/ segment news, segment rotations, and. even fake news. What is important about interest levels. regardless of sentiment—whether positive or negative—produced by any FIGURE: ISOLATING SIGUFICANT VOLUME EVENTS. rs you see Vole Pcs Proecion ndcang ony \elume eves above or bebo he nemalzed moving average of ven. of these events, is if the event or news, is tohave an impact on share price, the ‘volume will increase. This volume in- crease provides the liquidity requiredto allow market dynamics to fuel changes inprice. This makes significant volume increases the hallmark of any mean- ingful changes, first im interest, which, results in higher volume, and second, in influencing sentiment with the end result being a change in price. If you see a significant increase in NIVIDA Dec 2017 volume, but you are not aware of what news caused this dramatic changein the level of interest in this equity, itcreates a red flag that implores you to find out what is going on. This is imperative if you already own this stock. Most financial sites will incinde news feeds for all symbols and my first choice, of course, is my charting and trading site, ‘Tradingview. Google, Seeking Alpha, and the company’s own website are the next three places Igo to try and figuse out what is going on. Itnow becomes obvious that volume is an important trading signal only when volume spikes are significant, that is, above the normal daily average. Volume price projection (VPP), described here and depicted in Figure 1, displays only the differences the current volume represents above or below the current moving averageof volume. Thisisolates only significant ‘volume events for the trader. When used in combination with, ‘simple rule set, such as the volumelprice matrix, as seen in the chart in Figure 2, traders get a powerful tool set, which alerts them to potential opportunities while providing strong, confirmations of your trading decisions. VPP can be easily caleutated. In the swing-trading environ- ‘ment we ae targeting, a very short-term moving filter is used. ‘The daily volume is then subtracted from this moving filter and any changes from the moving filter values are displayed as eol- ‘umnns. This effectively causes the volume that is not significant to disappear as the columns now being drawn only represent the volume amounts above or below the values represented by the moving filter. As in the other articles in this series, a La- ‘guerre moving filter is being used. As you can see in the chart in Figure 1, the moving average value, although continuously updated, is normalized to zero and displayed as a horizontal, FIGURE 2: COMBINING VELUME PRICE PROJECTION WITH VOLUME/PRICE PROJECTION MATRIX. This provides radors wih he ait to projet ture pica tnd afr siplicant olumencoases, ‘center demarcation line, plotted on azer0 axis. Positive volume produces green columns and a reduction in volume from the ‘moving average produces red negative columns, ‘Why zero this line out? Because any volume that does not ‘exceed your own chosen moving average indicator and time- frame are not providing tradable information. They become ‘noise in your system that can confuse or complicate quick ‘trading execution decisions. We keep the red, reduction in vol- ‘ume columns because there are several situations, which [will describe a little later, where this information is also insightful to the trader as confirmation of developing opportunities. DECREASES IN VOLUME CONFIRMS ‘When there're decreases in volume, it could indicate lack of | interest. If that lack of interest continues, price ean trickle down as traders migrate to more volatile and profitable targets of opportunity. Decreased volume can also provide important information during common patterns such the ‘cup with handle pattern, Reduced volume during the trough period of the cup pattern suggests that most traders in this ‘equity are holding their shares despite the reduction in price. If and when price again starts to rise, it will be accompanied by an increase in volume as well. Reduced levels of volume below the normalized moving average canalso provide traders ‘er 2017 * Teta Anas 9f STOCKS & CONMODITIES + 31 “DURING VOLUME / PRICE PROJECTION MATRIX ‘Max Chart Provided ye StoekDatGeneCom FIGURES: VOLUME PRICE PROJECTION MATRIX. Youwilcbviousyencouner ‘xcepions to these ules but most mesh chart wil provide you wh accurate ‘ic tend drcton, based on prior istrcl pees and volume that are above {ho treshld of he mein average of lume, ‘with an important confirmation of an impending, profitable trading opportunity. ‘One of the most common short-term trading opportuni- fies occurs when a stock is in a strong long-term uptrend and experiences a short-term retracement, This divergence is @ ‘great opportunity toenterthisstock with slightly better entry position than if the upward trend had continued unabated. This opportunity can be confirmed if there's a reduction in volume—below the normal moving average of volume— during the retracement period. This reduction is the opposite of interest and reflects indifference, as most traders basically ignore this temporary change in price in a strong equity that ‘most wish to continue to hold, You are seeing an excellent reversion entry point, as the likelihood that this stock will revert to the mean is high. Itisnotuncommontosee these new inflection points become a base for a new strong upward leg to a new high. Confirma- tion of an emerging reversal is, as you should now expect, an increase in volume above the volume moving average. PROJECTING PRICE TRENDS USING VOLUME Before news events, your stock will ether be trending or con- solidating. During the time period that this new news event becomes public, your stock will start to move in the direction that was representative of the sentiment reflected by this news 32 + sober 2017+ Teall Anat of STOCKS & COMMODITIES ‘onincreased volume. As blatantly obvious as that may sound, the relative importance of the impact this news has on your stock's future financial prospects can producedivergentresals, As the volumelprice projection matrix in Figure 3 indicates, there isa glaring contradiction to what would have otherwise been astraightforward andclearselatioship.Izrational exuber. ance can cause a stock to accelerate, driving its price one or ‘even two standard deviations above or below the short-term ‘moving average. This produces a situation where the stock becomes either overbought or oversold and that stock enters a window of high probability to reverse its trend. ‘OR MAYBE NOT? Another seemingly contradictory situa- joncouldalso existhere and that is that the exuberance may not be irrational If earnings are driving what appears to be irrational exuberance and those earnings are accompanied by revenue beatandoptimisticearning projections sufficient toreset the eurrentand future earningsper share (EPS)expectations, then the accelerating upward price (large candle or gap up) may represent a new set-point or ‘base for this equity and it could climb higher from this point. Anytime that earnings and projected earnings, also referred tw as forward guidance, are this positive (or negative), i will draw attention to the equity, attracting new traders. These new traders will arrive with a new sentiment baseline regarding the future prospects for this equity. This influx of new trad- crs can cause enough liguidity to allow for a continuation of the price trends that would have previously appeared to be overly exuberant, {As you can see, this situation of irrational exuberance— creating a stock accelerating into overbought/oversold territory—is complicated, and ereates two potentially con- ‘radictory outcomes. This makes accelerating price the pri- ‘mary exception to what would have been a straightforward, ‘common-sense, and all-encompassing approach to analyzing volume. Keeping this double-edged sword of accelerating price exceptions in mind, it is possible to still propose a set of highly reliable volume rules. With the exception of rare situations, volume spikes pro-

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