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11/29/2021 |

$IWM Weekly Case Study: Volume Shelves, Relative Strength, and Multi-Time Frame Analysis

Using a mix of technical indicators as well as non-technical indicators can help market participants get an edge in the markets. Using TrendSpider, we go over the different ways technical indicators such as “Volume by price”, Multi-timeframe analysis (MTFA), as well as Relative Volume shown in a visual lower indicator to look for reversal points.

$IWM Daily Chart

$IWM chart.

This is a daily chart of the Russell 2000 ETF, IWM. In this chart, we look at different technical tools on the TrendSpider platform to get an idea of technical levels to watch moving forward as well as signals from indicators that may suggest a reversal and have in the past. These tools range from volume indicators to standard deviation indicators on longer-term timeframes to put the whole picture together and get an idea of where things could go from here.

  1. This number shows the anchor point for the “anchored volume by price” tool on the TrendSpider platform. This tool allows you to see where shares are aggregating from a specific point in time. In this case, the “anchor point” is the July 19th low which was an important pivot in the market before new all-time highs were hit in November. At this point, the “status quo” of the trend changed.
  2. This number shows the “volume shelf” which is a phenomenon that occurs using the “volume by price” tool whenever there is a large aggregation of shares at a particular point on the chart. In this case, you can see a this “shelf” is created by many shares aggregating from around $220-$223. This area can become a level of potential support because supply dries up here as many of these shares are back to breakeven from holding at a previous profit, which causes a shift in the supply curve.
  3. This number shows the relative volume indicator which allows you to see visually whenever there are spikes in volume above a specific threshold. In this case, any area shaded in green means there was a spike above the 20-day volume simple moving average. Anytime the spike goes to around 1.8-2 on the Y-axis (around 1.8-2x the normal 20-day average volume), there is typically a short-term reversal in price.
  4. This number shows the lower weekly Bollinger Band which has been a reversal point in the past. Using “multi-timeframe analysis” on TrendSpider, you can see the weekly Bollinger Bands overlaid on the daily price action in order to consolidate the chart into one image instead of having to use multiple timeframes to see the whole picture.

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.