Weekly Charting - 17th November 2017, 28924271, page-36 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by Jako8557 ↑

I nominated IFL as this week's chart because of the widespread high volume upbar that looked strong at the time, but subsequent trading suggests it was actually full of supply. I also posted about this principle midweek on last weeks charting thread, so I wanted to show it in action.

Whenever you see a widespread, high volume upbar, you should first wonder if it is actually weak (full of selling), and not 'can I get in for some quick cash'.
That doesn't mean bars like this are always weak, but the thought should cross your mind. Then watch the subsequent trading to confirm either way.

Tom Williams would often say "When serious selling is first seen, it will be seen on an upbar"
What he meant by this, was that when professional traders choose to begin the distribution process (not just a bit of minor supply, but a proper full blown distribution by a group.....'sell the lot', and 'set up short positions' where possible), they will start with a widespread upbar, usually on some sort of really good news announcement, either by the company alone, created by the sellers themselves, across the sector, or a combination of them.

In this specific case, it was a single supply event (perhaps by just an individual group), and probably not a full blown distribution by all involved, whereas a full blown distribution would take 'some time' to complete, often 'much more time' than this.

Note the ongoing high volumes and widespreads following the upbar, there quite a bit of volatility going on at the time.
Once the low of the widespread upbar had been taken out, the price action was confirmed as weak, and price has broken down a second time since then.
This week though, spreads and volumes have reduced somewhat, so the volatility is not as strong now, and most of those who bought on the high volume upbar as a short term trade, may have already realised they made an error and sold out (for a loss in disgust).
So there might not be a whole lot more downside to come......we'll see.......I will watch for some signs of buying or support next.

View attachment 836519

cheers

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I focused on the monthly and marked the highest prior close as I felt this was a significant historical level to be crossed. I often consider marking either the close or the high point based on following reactions and the touch here 3 years prior dictated this as well.
It does appear to have created some interest when this was crossed and closed above, and the sellers appear to have taken full advantage of increased demand when this happened, this is the bar I've marked the upper pivot of as BCX (Buying Climax) due to its very high, potentially climactic volume and low close on the bar after thrusting up to a new all time high, and a horizontal line marked here should frame the upside of any following Trading Range as a Supply line, any close above this line should be considered a SOS - Sign of Strength. A BCX is followed by an Auto Reaction (Rally-move up/Reaction-move down), an ease of movement in the opposite direction of the climax created by the void or vacuum effect of the climactic buying leaving no buyers to hold up price. This Auto Reaction is complete when support is found and a pivot point is created, a horizontal line for the bottom of the Trading Range may be drawn here as potential future support 'if' price is supported and a range develops.
This does appear to have put in a Buying Climax here and I would be looking for the Secondary Test of the BCX after the Auto Reaction to complete Phase A of Stopping Action, followed by a consolidation of some type to build a Cause for a following move.
I've marked in some of the high volume events with ATR1 or True Range (of Spread) for comparison and you can clearly see the weakness (selling) in the first bolded red high volume event with ease of movement downward with double the spread on less than recent volume. The relative reduced spread on the recent BCX compared to previous high volume events, would indicate that considerable buying and selling occurred here, and while the confirmation was lower indicating sellers dominated, the confirmation (following bar) combined with the previous bar so far has seen limited spread which could indicate some level of support is present up here. The only trapped holders would be recent and the potential buying may have taken care of that, that said most holders are sitting on gains, possibly substantial, and many may be looking to lock those gains in.

I've put the Daily below, is that a confirmed test of the gap?
I would be very wary of supply here with anyone holding onto gains baulking at a move lower, could see a rush for the doors or a Secondary Test of the BCX could open up a quick trade but you would be buying with weakness in the background.

Time for some shut eye, apologies if I rambled on
Cheers HF