08/31/2021 |

DIA Weekly Chart: Raindrop charts, Anchored Volume by Price, Seasonality & Multi-Timeframe Analysis

Some price action traders believe that price is the only thing that matters. Their charts are “clean” with nothing more than support and resistance levels marking key zones. Using this minimalist approach, these traders plot their entries and exits with varying levels of success and profitability. However, some other price action traders know that the “tsunami” starts far away and by the time it hits the shores (S/R Levels), many are left unprepared. Meaning, this camp of price action traders also believe that “price action” is very important, but also find an edge by using a few useful indicators for early signals that may give some clues into price direction and trend. Let’s look at a few of these indicators which might be of use to the price action trader on the weekly chart for the Dow Jones Industrial ETF (DIA).

DIA Weekly Chart: Raindrop charts, Anchored Volume by Price, Seasonality & Multi-Timeframe Analysis
This is a weekly Raindrop chart of DIA which is the Dow Jones Industrial ETF. This chart goes over both technical aspects on the weekly chart as well as seasonal aspects for DIA looking at monthly historical seasonality since the beginning of 2016. The beginning of 2016 was an important reversal point in the broad markets. We will discuss how the current weekly Raindrop shows a possible continuation higher as well as a possible target above using multi-timeframe analysis on TrendSpider.
  1. This number shows the Covid low bottom in March 2020 which is the anchor point for the volume by price tool This volume by price tool measures the volume distribution since this reversal. The “anchor point” is simply the point at which any volume tool starts measuring the volume at.
  2. This number shows blue raindrop weekly candles since the Covid low. Notice every time a blue raindrop forms on the weekly candle, there is a continuation higher. In this case, the most recent weekly candle is a blue raindrop which is also sitting right on a large volume shelf which will be discussed below.
  3. This number represents the “volume shelf” which is shown using the anchored volume by price. This “volume shelf” shows many shares holding around the $335 to $355 level which shows a large amount of shares are right around breakeven or a little bit in the profit at the current price of $354.60. These volume shelves can create a base for the price to move up off of.
  4. This number shows the historical seasonality for DIA since the 2016 bottom before the market continued to make higher highs after stalling for almost two years during the oil crash in 2015. You will notice going into the fall months, the seasonality does drop with September having a 60% win rate and October only having a 40% win rate. These win rates simply show what percent of the time a month closes higher than the previous month’s close. In this case, over the last 5 years, September has closed higher than the month of August 3/5 times.
  5. This number shows the upper monthly Bollinger Band above using the “multi-timeframe analysis” tool on TrendSpider. With the upper Monthly Bollinger Band being so much higher than the current price, this shows that the current weekly setup is not over-extended regarding the monthly Bollinger Bands. This tool allows you to see longer-term timeframe levels on a lower timeframe chart instead of having to use two different charts.

We hope that this case study helps to show how striking a good balance between “clean” charting and a few useful indicators can help you to improve your overall trading performance by providing more insight into price direction and trend than price alone can offer. Why not try out some of these indicators along with the many others available on TrendSpider for 7-days free with this special offer.