Flags/Pennants

An example flag or pennant in the last couple of days is NDO.

Is there a scan that catches this?

Unfortunately OBV assumes if today's close was lower than yesterday's then the volume was selling and vice versa.  That alone is too crude a measure.

Price is moved by the eagerness of those two parties rather than simply 'more sellers or buyers'. Of course ones eagerness can be affected by weight of numbers but many other factors can affect eagerness too.  Its a subtle but important distinction.  We make money by working out which side is most eager and joining them.  Reading the bar, not just the close, is one step in that process.

In addition, large volume on an up day doesn't in itself mean professionals getting into the market, it could also be professionals exiting the market or 'frenzied public activity' or both.  Its all about context, understand how the professional works and you can see his footprints and read their intentions.

I'm not suggesting OBV is useless, just that it is no substitute to understanding the relationship between price action and volume in deciding what the 'professionals' are doing.


ITT.



Edited by IT-Trader