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06/28/2021 |

$IVR Monthly Chart Case Study: Raindrops, Anchored VWAP, and Anchored Volume by Price

TrendSpider has been changing the way traders trade with a slew of new proprietary charting indicators never seen before, as well as improving on many traditional ones; helping to reduce the noise on the charts which often leads to bad decisions and emotional judgments. The TrendSpider family of “Anchored” indicators (such as OBV, VWAP, and Volume by Price) are garnering the attention of many traders who are beginning to realize the benefit of using technical indicators which aggregate data over the more widely used data from lagging indicators (such as MACD, RSI, etc.).

As there is no “magic bullet” in trading the markets, we still use these anchored indicators in conjunction with others, such as Raindrop® Candles, to get a better read on price direction with consideration of the most profitable margins of error. In this case study, we will look at these “Anchored” indicators being used with Raindrop® Candles on the monthly $IVR chart.

$IVR Monthly Chart

$IVR chart.
This is a monthly chart of IVR looking back over the last 2.5 years. In this image, you can see a recent monthly candle breakout of the symmetrical triangle for the month of June. This case study focuses on volume as well as supply and demand in the market and how you can see a different perspective using the anchored VWAP, Raindrop charts, and anchored volume by price.

  1. This number highlights the anchor point for both the anchored volume by price (VBP) as well as the anchored VWAP. This is the point at which the trend reversed to the downside during the covid crash. You want to anchor the VWAP and VBP from points at which the trend reverses and the “status” quo changes in which buyers become sellers or sellers become buyers.
  2. This number represents the “volume shelf” which is shown using the anchored volume by price. These grey lines highlight different price levels in which volume has aggregated since the reversal point. In this case, you can see there are many shares holding in this area which creates a base for price to move up off. When the price is in-line with one of these shelves, most shares are at breakeven and all you need is a shift in the demand curve to make a big move. If everyone is holding a breakeven, supply dries up and you can also get a move up without too much demand coming in.
  3. This number represents the anchored VWAP from the February 2020 highs. As you can see, the price has respected this line multiple times on moves to the upside and you can see that the current monthly candle for June has also respected this level once again. This blue line is the average price per share since the reversal in trend in February of 2020. Once the price gets back to the blue line, people start to “breakeven sell” after having a relatively large drawdown when the price was in the $1.60-$2 level below.
  4.  This number shows the volume profile of the June monthly candle with a lot of volume taking place above the symmetrical triangle resistance line. If there is a large “bulge” of volume at the top of a raindrop, this shows buyers were willing to absorb supply near the highs of that candle. If there was no demand at the top of the range, there would be no volume profile there, the price would have to drop to find buyers. Raindrop charts give you a unique perspective into price action and volume within the market.

We hope that this case study has shed some light on how using “anchored” indicators with Raindrop® Candles can help to make visualizing aggregated data (volume) on the charts easier so that entries and exits are based on more concise and clear price information relative to the most profitable liquidity zones. Discover how our family of “anchored” indicators, Raindrop® Charts, and 100+ other indicators can change the way you trade. Try out TrendSpider for 7-Days free here.