03/29/2021 |
$SPY Weekly Chart Case Study: Anchored Volume by Price and Seasonality
As discussed in our previous case study, the Anchored Volume by Price Indicator (AVbP) is a visual representation of where most buying volume occurred on the chart. Individual volume nodes stacked create an easy-to-understand visual representation of support and resistance. When the AVbP is used in conjunction with our Seasonality Widget, they offer a powerful confirmation strategy for trade entries and exits. Let’s take a look at how using TrendSpider’s Anchored Volume by Price alongside the Seasonality Widget can help traders make more informed decisions with a case study on the $SPY.
$SPY Weekly Chart
This is a chart of the S&P 500 ETF, $SPY looking back since the September lows. This chart uses both the anchored volume by price and seasonality feature on TrendSpider which focuses on volume distribution from the September capitulation point as well as the monthly seasonality going back to the 2016 lows in the market.
- This number represents the September lows in which the market “reset” after the August 2020 melt-up. At this point, we want to measure where the volume is aggregating from at this point forward as this is an important pivot within the uptrend since March 2020.
- This number represents the “volume shelf” that has formed in the $385-$390 level. This “shelf” is made up of several volume nodes that show there is a lot of volume holding at this area which creates a base for price to move up off of as this area represents where a majority of participants are holding at breakeven.
- This number shows the “seasonality” widget on TrendSpider which allows you to see historical seasonality from different points in time as well as different timeframes (Hour of day, day of week, week of year, month of year). In this case, this is a lookback period of 5 years which is also in line with the important 2016 lows put in before a huge move to the upside in the markets. In this case, you can see April has a 100%-win rate since the 2016 lows, showing a possible very strong seasonal trend emerging into spring.
- This number represents the weekly price closing above the ascending triangle resistance, showing a potential longer-term breakout into the first week of April.
The Seasonality Widget
TrendSpider’s Seasonality Widget makes it easy to visualize seasonal trends for any security. You can use these data points to guide your directional bias in placing trades or when settings limits for option strategies. You can select four different kinds of seasonality from hourly to monthly and customize the Since date with the click of a button; enabling you to measure seasonality from a specific starting point. The Seasonality Widget is a very useful tool to have in your trading arsenal.
More on the Seasonality Widget here.
Try “Jake’s Volume shelf Scan” Free In TrendSpider: http://charts.trendspider.com/shared/605ccc3c3399bf0016538b69?t=1
