Kipper, let's talk about your proficiency with OBV which you held your hat on and you talk about your proficiency with TA, considering you aligned that with dissing comments about ramps which questions the integrity of posters who have made positive analytical comment because you have grouped them together without distinguishing.
In the case of on-balance volume, it is calculated by summing the volume on an up-day and subtracting the volume on a down-day, no? Then why on the P&F Chart that takes out market noise, do we get a surplus buy volume over sell volume since the big down including the larger down volume day as can be seen on the chart thread? This suggests OBV is telling porkies in the current situation and is the wrong tool in isolation.
OBV is one of many momentum indicators to detect what smart money is doing, like the A&D line. The A&D line has a slight upward slope from bottom and performed toady as predicted last night. That's why I posted that in the chart thread to test your understanding. Its called synthesis and is on a higher plane of thinking than analysis. Your short course should have taught you this. The momentum oscillator is also starting to rise since bottom. Lagging indicators confirm what is happening. The smart money works in contrast to the retail, that's why its a buy. They must accumulate, mark up and disperse for turnover and profit. The latter already happened at the peak, yet you emphasize the downturn which falls into a natural pullback zone. Your short course should have taught you this. It seems you did not listen well to your trainer in the short course you did not pick up on the subtleties to paint the bigger picture.
Limitations Of OBV
One limitation of OBV is that it is a leading indicator, meaning that it may produce predictions, but there is little it can say about what has actually happened in terms of the signals it produces. Because of this, it is prone to produce false signals.
It can therefore be balanced by lagging indicators. Add a moving average line to the OBV to look for OBV line breakouts; you can confirm a breakout in the price if the OBV indicator makes a concurrent breakout. Hence the buy signal in relation to other lagging indicators outlined in the charts posted on the other thread.
Another note of caution in using the OBV is that a large spike in volume on a single day can throw off the indicator for quite a while. You place so much emphasis on this. For instance, a surprise earnings announcement, being added or removed from an index, or massive institutional block trades can cause the indicator to spike or plummet,
but the spike in volume may not be indicative of a trend. The trends were pointed out on the charts on the other thread. So what was the spike in volume followed by? A capital raising with the prospect of churn. Go figure and go back to school.
Price will hang around these levels. Results will be the determinant while the games are played. Even those that will sell on the news have not done so given the low volume. Maybe retail being sucked in by selling after the bell yesterday so the scans look different ? Mate, it seems you are role playing at the margins..
