I am a big believer in making sure that the probability of success for a trade is as high as possible. I am sure as a trader, or investor, you have this as a goal as well. To accomplish this, it is imperative to have a keen focus on trade entry – whether this be in a Dip Buy or even a Break Out trade. Whatever tools that can be utilized to hone this process is worthy of a look.
One simple way to look at the probability of price movement is by reviewing the Volume Bar type/size on a Daily chart. To illustrate, let’s take a look at the Daily chart on $TWC:
What do you notice for the month of September? You have 7 Green bars in a row, as price drifts up. Then there are 2 Red bars in a row, as price consolidates. Now we have 5 Green bars in a row leading up to today, as price Flags/Consolidates here.
Since crossing the 20 Simple Moving Average, the Bulls have been very interested in taking a position in this stock. What is more likely now, what is the higher probably action for price? If it Flags further what do you do?