---------------------------------------------------------------------------------------------------------------------------------------------------- Good Morning and Welcome to the XJO Thursday Thread
OK, things are getting interesting......and a little complex.....
Anyway, the XJO closed higher on Wednesday, where price has made another attempt to accelerate away from the danger point.
Spread was similar to Tuesday's, volume (both as turnover, and the 'normal' volume - not shown) was increased, and the close was high, leaving a possible reversal setup, that would need upside follow through to confirm.
Now while this potential reversal may work out OK...... I don't really like the lower volume on the downbar, and higher volume on the upbar.
I prefer it to be the other way around. To me, this way around suggests a lack of buying on the downbar and a scramble to buy back on the upbar. Plus the second bar did not close above the high of the first bar, which shows there was possibly some difficulties in moving higher, as supply was still coming in. Price will not continue higher for very long if supply is continuing to be drawn out and begins to thwart progress. In this case price would generally retreat and either prove it is no longer a problem, or deal with the supply, at a lower level.
(and just for those interested, I prefer a (potentially bullish) reversal bar to have higher volume on the downbar (which is a bit concerning at the time), then lower volume on the upbar. As that suggests (once complete) that the majority of the buying was done on the downbar, then price reverses and moves higher on relatively low volume within a temporary supply vacuum (because by far the majority of the supply was bought on the downbar, leaving a brief lack of sellers at that level, which allows price to move easily higher on the reversal). And finally the close of the upbar being above the high of the downbar shows an 'intent' and 'ease of movement', both of which are then confirmed by strong follow through to the upside)
A 'potentially bearish' reversal bar would have the exact mirror image of the bullish set up - a rough example of which can be seen on the XJO chart recently on the 9th & 10th of September. And interestingly, the close of the down bar on that bearish setup (10th Sept) has limited the upside ever since (arrowed in red).
This leaves two conflicting (and slightly imperfect) reversal set ups opposing each other.
On paper the bearish setup looks the stronger of the two, with wider spreads and higher volumes, however only future price movements will confirm for sure.
(20min delay)