TradeFlow and Constant Volume Bars
A gap down opening in reaction to the poor housing data has sellers in control during the morning trading in the e-mini S&P 500. Before we see today’s action, we will review yesterday’s TradeFlow chart.
Before, we look at yesterday’s TradeFlow chart, I want to show another charting style available from CQG and that is the constant volume bars (CVB) chart. A CVB chart completes an open-high-low-close bar when a volume threshold is crossed. I use it for both day and night sessions. During the night session, the bars only build based on the volume of trading: no volume, then no new bars.
I don’t use TradeFlow charting for the GLOBEX night session because of the thin volume. My TradeFlow charts only use the GLOBEX day session. But, it is important to be aware of price levels hit in reaction to economic releases that occur before the day session begins. For that, I use CVB bars. For the e-mini S&P 500, I use a 25,000 contract per bar chart. Each bar is complete when the volume for the bar reaches 25,000 contracts traded. This keeps me aware of the longer-term trend and key support and resistance levels. This chart shows the high established in reaction to the release of CPI before the day session began. The chart shows a retest during the day session. We see that the market could not better the price level established due to the positive CPI news.
This TradeFlow chart includes both the night and day session for yesterday. The consecutive solid green bars before the first peak is a view of the market being swept by traders lifting all offers. We see the retest of the resistance zone and the TF5Um5D study peaked while the market was in the resistance zone, as well as the TF5VCrs buy volume line (green) formed a peak.
This morning, the e-min S&P gapped down, and the TF5Um5D study hit low readings. At the moment, the study is positive, but rolling over from a low peak reading, implying a lack of buyers.