Volume Price Analysis

Long $SGYP Day 150 Analysis

Unfortunately, I’ve been holding this one for a while and been getting my butt kicked! I’m not tracking this one in my Trade Book becauseĀ  it was an open trade before I started using the techniques I’m using now. For the record, if I would have know the things then that I’ve been learning and studying now, I would have never taken this trade when I did. So, now I’m going to try and apply some of these things I’ve been studying and see if I can figure this thing out.

micro analysis

Here is today on the 15 minute chart. I pointed out three candles from today that are interesting. The first is a long spread red candle on high volume. That is never a good sign. However, the next one is a really good sign. There is significantly less effort, but with almost as big result to the up side. That tells me the bears got tired and the bulls took control pretty easily. That seems significant because after that big red move, you would think sellers would be firmly in control, but not so.

That last candle I pointed out was the same thing. Another show of strength. The last candle of the day didn’t look so good, but on such a small time frame I don’t put much emphasis on the opening and closing candles because they are usually skewed by day traders.

None-the-less, it may be significant where it reversed at. The orange dashed line is what I think may be a neck line of a head and shoulders patter, which will be shown more clearly later. That line seemed to act as resistance, which may not be such a good sign. That long upper wick isn’t very pretty either, that means it closed with weakness. But again, that may just be day traders closing their trades in the last 15 minutes of the day.

Another good sign is the 5DMA crossing over the 20DMA right there at the end of the day, highlighted in the ellipse. That could carry over into a green opening tomorrow. Today’s action was responsive activity. On the volume profile, the low of the day went into the unfair low value area, but quickly returned to the fair value area and closed just above the POC. All that means is that the bears had the upper hand, but the bulls took back control.

macro analysis

Here is today in the context of the last 15 days. Let’s start with 15 days ago. That was unusually large volume, which means it’s probably safe to say wholesale was participating. I went and back tested that day to confirm what I thought. A good part of the volume on that day was involved in the lower wick of the candle. That means either there was a lot of buying or short covering in there at the end of the day. Either way, that would be a good sign. But, the next day had an ugly upper wick bull trap. I’m willing to bet there is a good bit of retail trapped in that $3.08 to $3.26 area. They likely tried to buy a bounce off the strong close from the day before and a strong opening the next day. However, it reversed and closed down. From there the volume decreased significantly and the last 13 days have just been retail trading.

These last 13 days may be absorption of selling, which would be good. But, it’s more likely that retail are just deer in headlights waiting for the conference call on 9/7. Fundamentally, they are running out of cash and the anticipation is what they are going to do about it on the conference call.

Technically, my fear is that as we linger around $3, we are building a new value area. You can see the volume at this price is building and giving the volume profile a negative skew. Basically that means, we will need strong volume and fast price movement to get past the trapped retail and back into the more liquid main value area where all the volume is, which would be in that yellowish highlighted area between the two white lines. If that can happen we should get to the POC at $4.12 and with some really good strength past that into the $4.50 to $4.80 area. But ultimately, it will be rejected and fall back to the new value area it is creating here at $3.

Also, the 5DMA (light blue line) is really close to the 20DMA (dark blue line). If we do get news that is perceived as being good, the strong move up will also cause the 5DMA to cross the 20DMA. If so, that would give confirmation of a new uptrend, even if it is short lived.

Finally, it looks like the last three day has turned the 5DMA down, but the acc/dist line (the light blue line in the volume area) looks like its turning up during that same time. It’s early and slight, but that could be a divergence that would signal the price will go back up to resync with the acc/dist line.

global analysis

Here is the weekly. I mentioned in the micro analysis the dashed line possibly being the neckline of a H&S pattern. I highlighted the two shoulders and head with the blue rectangles. Granted, I’ not very good with patterns. The right side looks pretty elongated and maybe that invalidates the pattern. I’m really not sure.

Right now we are in a pretty steep down channel, which doesn’t look pretty. In the macro analysis, this current consolidation was building a new value are in the volume profile, but on the weekly it is more of just a ledge. Basically that means this area should act as good support if it should break out of it and revisit it again, or heavy resistance if we fall under it.

There is a big gap between the 5DMA and the 20DMA to the down side, which means this down move has been pretty strong. The acc/dist line is trending down with the price, so they are in sync on the weekly. As a result of all of that, I see nothing to get too positive about in the intermediate term.

game plan

So, 9/7 is supposed to be the line in the sand. From this analysis I see the most likely scenario being short term run to the $4.50 – $4.80 area. Unless they release some news to drive it before hand, I’d think this run up would be a reaction to whatever happens on 9/7.

I typically like to find the landscape of the weekly chart using the Wyckoff Method. I tried this already, but I just couldn’t see where it applied. That being said, something did occur to me. Granted it is waaaaaay early to be predicting this, but if we did get the short term run up then drop back to $3, it would coincide with Phase A of the Wyckoff Method.

If it did work out that way, this latest sell off would be the selling climax. Which this last sharp move down on huge volume would be indicative of a selling climax. Then, if we do get a short term run up, that would be the automatic rally. Finally, a fall back to the $3 area would be a secondary test of the selling climax. Those three things are the defining events of Phase A of accumulation in the Wyckoff Method. Just FYI.

As a secondary scenario, if things get worse and the price falls after 9/7, I see it drop to around $2.40 – $2.30. I think this could be possible because based on all the chatter in social media, there seems to be a lot of retail in this. It’s very possible that the MM’s will want to do a big shake out to get rid of as many as possible and take their shares. I have my support line at $2.43. If this scenario happens, it is likely they will quickly take it slightly below that. The break of the support line will flush out weak longs and entice new shorts. However, I would expect it to reverse again quickly and cause a spring to trap the shorts. As the price reclaims the support line they will cover which will fuel the run up, which will be further fueled by panic buying.

I will revisit this again after 9/7, unless something eventful happens before, to see if my call is on the right track.

 

 

 

 

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