$ES weekly range, $GC_F

Its tough to be calling tops when 5 of the last 7 months were up. November was however the first month in a while where the [monthly low + 6 mth avg range] was not reached. This is 1835/40 and a bit of a warning sign to me that it was not reached (shown in chart with white lines whose upper edges are marked by 3 black boxes and a red one).

The closing swing was down on the last few sessions of the albeit shortened week (might mean nothing but I have seen some tricks during this type of market).

People are looking for the self-fulfulling end of year rally. The media are writing about how calm things have gotten fundamentally and developments with Iran are just the latest. I don’t want to get complacent and am plotting what a 5% pullback would look like. The 1680/1700 area was not retested since price left there (I said that about levels much lower before also).


This is something I came across last week on consolidating volume.

David Ryan interview in Market Wizards:

Can you elaborate on using volume as a trading tool?

When a stock that has been moving up starts consolidating, you want to see volume dry up. You should see a downtrend in volume. Then when volume starts picking up again, it usually means the stock is ready to blast off.

So, in the consolidation phase, decreasing volume is good. If you continue to see very high volume, do you start thinking potential top?

Yes, because that shows that a lot of people are getting out of the stock. You want an increase in volume when the stock breaks out, but you want a decrease in volume as the stock consolidates.

Any other volume signals you look for?

When the market, or a stock, is bottoming, you want to see increased volume combined with an absence of further price progress on the downside. For example, if the Dow declines from 2,200 to 2,100, trades down to 2,085 the next day, and then closes higher on increased volume, it demonstrates support. It suggests that there are a lot of buyers coming in.

Gold chart with long term volume based Support and Resistance levels as mentioned before:




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