03/25/2021 |
$SPY Daily Chart Case Study: Learn to Use Anchored Volume by Price
The Anchored Volume By Price indicator can help you visualize areas of support and resistance based on the volume traded at certain price points within a range. Let’s take a look at how you can use TrendSpider’s draggable Anchored Volume by Price indicator to paint a clearer picture of the supply and demand zones for $SPY.
Below is a daily chart of the S&P 500 ETF $SPY from March 4, 2021. This chart shows volume measured as a function of price since the pre-election lows. Instead of the price being measured by time, it is measured by price intervals called “nodes.” The ability to see where volume has taken place over a specific period of time is possible by using the “anchored volume by price” feature on TrendSpider. This allows users to easily move the “anchor point” (vertical line) to different swing highs/lows where the status quo of the trend has changed/reversed.
The chart above shows the “before” chart, taken March 4th, which identified a volume gap in pierce below. The price is able to drop through this area very quickly as it does not have any friction (holders are back to breakeven) until the next volume node below at $372. At $372, a larger group of shares were back to breakeven, which helped supply dry up, as there were no more profits to sell for these particular holders *anywhere above $372 they have profits). This price is not guaranteed to stop at this level but this would look to be a “level of interest” below in which supply would have likely dripped up short-term, allowing price to stabilize.
The “After” section of the chart above shows what happened after the price dropped through the “volume gap”. Notice how the price was able to bounce right at this next level of volume at $372, as supply dried up. The price was able to then quickly move back through the volume gap to the next shelf above around $384, which acted as a short-term area for price to cool off (supply zone) as many shares just deal with a drawdown from around $384, are back to breakeven. At this point, they may sell and move to cash after dealing with the drawdown, adding to supply on the market.
Automate the Anchored Volume by Price Indicator
Learning about TrendSpiders’ innovative volume profile features? You will be pleased to discover TrendSpiders VBP tool is able to be anchored to a range of pivot points automatically!
Read about Automated Volume by Price here.
Try “Jake’s Volume Shelf Scan” Free In TrendSpider: http://charts.trendspider.com/shared/605ccc3c3399bf0016538b69?t=1
