Today's content includes:
  1. Signal strength - weakness of the market based on price and volume analysis.
  2. Price and volume patterns signal a bearish reversal in the market
  3. Price and volume patterns signal a bullish reversal
  4. And so on.
Big boys need to test the market before pushing prices in one direction to make sure they succeed and don't get pushed back by the opposing side. Specifically, in case the consolidation of goods in the Demand zone is complete, the large cash flow will be tested with 1 candle. The test is considered successful when the price no longer falls in the Demand zone but starts to show signs of increase, accompanied by a weaker volume. The test is considered unsuccessful as the price continues to fall and it is likely to penetrate the demand zone, the associated volume not only not decreasing but increasing.


For the way of testing in the Supply area, it is similar, after having gathered enough short sell goods, the big boys will test the reciprocal buyers to ensure that the buyers are still very few. A test is considered successful when the price reaches the Supply zone but does not increase any more, especially when the volume is markedly lower. Conversely, if the price still penetrates the Supply zone with normal or large volume, the test is considered a failure.


How is the strength and weakness of the current trend determined?

The strength and weakness of the trend will correspond to the market's up and down sentiment. Based on the price is not enough, we need to rely on the volume to know behind each candle hiding hidden feelings of the parties participating in the trade.

We will convention together some of the following concepts for easy discussion:
  • For candles, there are bullish and bearish candles. A bullish candlestick is defined as the closing price of the current candle, which is higher than the previous one. A bearish candlestick is a candle whose closing price is lower than the previous one.
  • Regarding volume, there are: low, medium, high and very high volume.
  • Regarding the real body (spread), there is a narrow real body, wide real body and medium real body.
  • Regarding the closing of the candle, there is: closing 1/3 above the top of the candle, closing 1/3 in the middle of the candle, closing 1/3 at the bottom of the candle.
Candlestick patterns with corresponding volume signal that prices are about to reverse. We will have 6 patterns like this:
Pattern Weakness A
  • Is a bearish candle
  • High volume
  • The body of the candle is narrow or medium
  • Closed lower than 1/3 of the candle
Pattern No Demand
  • Candles increase
  • Low volume (you need to compare with the previous candle, the lower the better)
  • The body of the candle is narrow
  • Closed lower than 1/3 of the candle
  • Very good signal for pullback during downtrend
Pattern Weakness B
  • Candles increase
  • High or very high volume (the higher the better)
  • The body of the candle is narrow or very narrow
  • Close below 1/3 of the candle
  • Should be with another candlestick position is better.
Upthrust pattern
  • Up or down candlestick
  • There is a peak overcoming strong resistance
  • Large body
  • The price closes below 1/3 of the candle
  • High or very high volume
Pseudo Upthrust pattern
  • Up or down candlestick
  • Like Upthrust, there is a strong resistance at the top
  • Large body
  • The price closes below 1/3 of the candle
Low volume
  • Should be with another candlestick position is better.
Stop Volume Pattern
  • Candles increase
  • The body of the candle is wide open
  • Very high volume
  • Need more confirmation