What do we see here?

First, we have a gapped up open, so the electronic

contract
must have ticked up from the physical close of the day before, which you can
see
here. Volume is high and a nice wide spread up candle closes the ce
ctickedfirst five
minutes of trading. The big operators are joining the move. The next two
candles are
down, but the volume is falling, so we do not expect the market to move far,
and
indeed the lower wick on the second of these candles, is a clue that this is
simply
some early profit taking on the gap up open, and that the buyers are in
control.
From there, the market moves steadily higher. There are no signals of a
reversal, just
a steady rise, with minor pull backs, but each time we see a little wave lower,
then
this is balanced by a wave higher in the volume trend, which is what I was
trying to
describe earlier. You do have to be a little flexible in how you view volume
in a
rising (or falling) trend. What is interesting here is if we compare the first
'wave'
with the second 'wave' in terms of the buying volumes. Volumes on the
second wave
in the up move, are slightly lower than volumes in the first wave, so we may
begin to
think that perhaps this move was running out of steam, and possibly time to
exit the
trend. However, there is nothing particularly frightening in any of the
subsequent
price action, and indeed as we can see on the right of the chart, the down
candles
have very low volumes. But interest appears to be waning and we need to be
vigilant.
One further point on this chart, before we move on to look at another.
The move higher after the first few candles of the open would also have
given us
confidence as the index broke above the initial resistance area created at the
open.
This is only a secondary resistance level, but nevertheless another 'confidence
builder' for us in taking a position in this market. The same applies at the
right hand
side of the chart as the market moves into a congestion phase, and coupled
with the
general decline in volumes, this may prompt us to exit at this stage.