04/27/2021 |
$SKLZ Daily Raindrop® Chart Case Study: Anchored VWAP, Volume by Price, and Seasonality
On the TrendSpider platform, Anchored VWAP is all the rage these days; Anchored Volume by Price, the new black; and Seasonality, well, most things are just about good timing. This trifecta of technical indicators is a very powerful combination that can help improve any trader’s profitability ratio if used correctly. Unfortunately, there are a number of traders out there who might have only grasped the use of these technical indicators from a basic view which might adversely affect the outcome of their trades. In this blog post, TrendSpider’s Chief Market Analyst, Jake Wujastyk, goes into a case study on how to use these indicators with more success by taking a look at $SKLZ.
$SKLZ Raindrop Chart
This is a daily chart of SKLZ from late January 2021 to late April of 2021. This chart touches on the process of anchored VWAPs, volume by price, supply zones created using volume by price, as well as historical seasonality since the start of 2021 from a “day of the week” perspective.
- This number represents the swing high for SKLZ which is when the trend reversed and bears took over, creating lower highs and lower lows. This is the area to anchor both the volume-weighted average price (VWAP) and volume by price as this is where the “status quo” changed in the market as the trend changed from bullish to bearish. At this point, buyers on the uptrend likely turned to the sell-side.
- This number represents multiple times where price respected the anchored VWAP on the move down and an area where these lower highs topped out before reversing and hitting lower lows. At this point, price gets back to the “average price per share traded” from the reversal point, and breakeven sellers come in, adding to supply on the market.
- This number represents the “volume shelf” above in which price had trouble getting through on the initial move up on April 21st. This is another “supply zone” as these gray volume bars show where many shares are holding (around $18/share). Imagine initially buying at $18/share in late March and then dealing with a 30% drawdown as price melted below $13/share. As the price gets back up to $18, you may consider selling some or all of your position as you are back to breakeven and take your capital elsewhere, adding supply on the market.
- This number represents the anchored volume by price which would again act as a supply zone above if price can get above the “volume shelf” around $19. This anchored VWAP has a “sensitivity” alert on it which means you will get alerted anytime the price gets anywhere within the purple area, rather than getting alerted right at the exact line above.
- This number shows that Tuesday is by far the strongest day of the week so far in 2021 for SKLZ with a 63% win rate. This seasonality feature is a great thing to pair with technical setups on the chart.
We hope that you enjoyed this case study which highlighted the importance of using technical indicators in conjunction with each other to help refine your entry and exit points. At TrendSpider, we take it to another level by adding sensitivity adjustments to alert function, so you never miss a trade having to rush to your phone or PC to catch the move. Sensitivity Alerts can be set to trigger within a +/- range of your ideal entry price. This is just one of the many game-changing features you’ll find on TrendSpider. Try us out for 7 days free and see how Sensitivity Alert can help improve your profitability ratio.
