Volume Price Analysis

Long $SGYP Day 175 Analysis

My last game plan was about 2 weeks ago. At the time a new low of $2.57 was made, but I had noted a little strength. I was looking at a worst case scenario and a low around $2.43. As of today, it looks like I was wrong and the low so far was $2.56. I actually did add to my position in the low $3’s once the 5DMA crossed above the 20DMA on volume and the Acc/Dist line and OBV lines started moving up to confirm the move in price.

micro analysis

Here is today on the 15 minute chart. I see three surges today shown in the blue areas. We opened with selling shown in the first blue area. The volume rose quickly on that selling, but tired out just as quick. The quick drop that stopped in its tracks is a good sign of strength.

Then, there is that one candle I pointed out. That candle confirms the strength. It was a bigger green candle that bounced and reclaimed almost the whole drop. What is more interesting is the volume behind it. The volume is small, which indicates it was easy to make that move up. It didn’t take much effort to get a result. That’s what happens when supply dries up, it doesn’t take much demand to move it. That opening drop was pretty much all the sellers had, that one candle was a test of continued selling and sellers were gone.

After that test, there are two mini up trends, each on increasing volume. It was a retail day owned by the bulls after the initial opening sell off. Another confirmation of strength is seen in the volume profile. The whole profile has an upward skew where you can see the bulk of the volume was at the top of the curve. That means value was found higher as the volume was higher on the up moves.

Another thing to note is that orange line below the candles. That is the upper resistance line of the down channel we had been trading in. It’s always a good thing to see the price moving out that channel to hell.

macro analysis

Here is today in the context of the last 6 days. Today’s candle has that nice lower wick, which in not unexpected after looking at the micro analysis. The opening selling brought it down and the strength over the rest of the day brought it back creating that nice wick.

My only comment about today’s candle is if that’s a hammer or hanging man. I’m not very good at telling the difference, so next week will have to tell. If its a hammer, it means the start to next week should be continuation of strength. If it’s a hanging man, it would signify a reversal and pull back.

Here is a little note on a possible pull back. Again you can see the price has broken out of the down channel, the orange line. It is very common that after a break out, that break out point is retested. So, if we should fall back to the $3.20 area, it’s not necessarily a scary shake out, it is just doing what it’s supposed to do. That being said, if it breaks below the $3.20 on higher volume, that may change things. So, watching the volume is more important than the price on a pull back.

The volume profile on this longer time frame than the micro analysis is also upwardly skewed. The volume is on the higher end of the price range, which is a sign of strength. Buyer are willing to buy at higher prices as the value area rises.

The 5DMA (light blue line) made a distinct cross of the 20DMA (dark blue line) on high volume. At that cross is where I felt comfortable adding to my position, especially in light of that increased volume.

The volume has been decreasing over the past few days. It appears that some smart money participated on that high volume 4 and 5 days ago, but have stopped. These last few days have been retail movement.

global analysis

Here is the weekly. To me, it looks like we are in a pretty fragile area. We are on the brink of some good moves up, but still aren’t out the woods of negative events. Personally though, I am more cautiously optimistic than I am negative. These next weeks will be important to the longer term price action.

First of all, the break out from the channel to hell is obvious and a triple bottom was made in the overall trading range. That alone is enough cause optimism. However, there is still cause for the caution that goes with the cautious optimism. I’ve seen some calling the bottom and celebrating victory, but I think may be a bit premature to let your guard down.

I plotted the blue area that goes across the volume profile. I think this will be an important zone and the more we move into it, the better. That zone covers roughly between $3.35 and $5.00.

The boundaries of the zone I plotted out are distinct LVN’s (low volume nodes). The higher volume between those zones represent trapped retail. Unfortunately, a lot of retail was buying in this zone thinking the price was cheap, and they were proven wrong over and over again. As a result, there are lots of trapped retail.

We are just now starting to enter the low end of this range. The volume here isn’t very high yet. There aren’t as many owners here and the price difference between them is more scattered. This will make the price movement more volatile as those trapped retail will be looking to sell, at least a portion, at break even. Because there are less in this area, the orders between them will have bigger spreads and cause volatile price action as they are filled.

This is an area of caution because if we can’t clear it, it will retest the breakout price. As mentioned before, that isn’t bad or unexpected, but if it entices volume behind it, it may re-enter the hell channel when we are looking for the stairway to heaven and give up the progress we’ve made. The problem we will have is if we do fall and re-enter that small bell curve below on the volume profile. That bell curve shows new retail with strong hands. If it moves back into that area, below the $3.20 or so range, they may sell and book profits before they lose them. That selling could push it back down towards the lows.

On the other hand, if we continue to ascend, we will enter into higher volume areas. The higher the volume, the more trapped retail. There will be more orders which will be closer in price and the price movements will become more liquid and smoother. New buyers will have an easier time absorbing the sellers if there is less volatility. Also, if it can move up quickly, the trapped retail may hold their ground and not sell at all as they break even and start to see gains. That would give the new demand more strength as its not offset by supply.

If we do move up towards $5 over the next weeks, I would suspect things to get volatile again when it gets there. I’m also keeping that orange dashed line for future reference. That line is a resistance line of a large descending triangle. If the price does get to the $5 area and it is timed to intersect with that line, it could be a good point to take some profits. But, that’s a while off and we will cross that bridge when we get to it.

Finally, The moving averages are still showing a down trend, but the faster averages are starting to turn up towards the slower ones. This is more evidence that things are getting better, but still not ready to claim victory. Also, the acc/dist and OBV lines turned up with the volume and price which validates the up move and break out as legit.

game plan

Obviously, this is the best things have looked in a while. We aren’t out the woods, but things are way better. If the volume stays lower next week, I’d expect a retest of the $3.20 area. If you are aggressive and have some extra cash, that may be a good time to buy. However, keep an eye on the volume too. If it hits that area on high volume, it could spell trouble and I’d hold off on buying. If it does it on light volume, I’d pull the trigger.

In fact, a retest of the breakout may be healthy. If we do retest and retail uses that as a buying opportunity, it will provide fuel to push back up and break into the liquidity of the profile highlighted in blue on the global analysis. Not to mention, a retest might setup a bear trap, who’s covering after will also fuel a move up.

 

 

 

 

 

 

 

 

 

 

 

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