This next example is another extremely popular commodity for traders, gold,

and the
ETF is the GLD fund. Once again I've taken a faster time frame here to use as
an
example, and in this case my commentary is on a candle by candle basis with
no
annotation. The reason is that the chart would simply be too cluttered!
Before starting, let me put the gold market into context for you. At the time
of this
ctim
The market opens gapped down on extremely high volume, a clear signal of
weakness. We are starting with weakness which has been validated by
volume. The
next candle forms, a small hammer, again with ultra high volume. Is this
stopping
volume – perhaps, and we wait for the next candle to form, a small candle
with an
upper wick, suggestive of further weakness, and coupled with high volume.
Clearly not a positive response to the 'stopping' volume. The next two down
candles
suggest a modicum of buying on each, with the lower wicks showing some
support,
but the market continues lower on rising volume with the penultimate candle
suggesting stopping volume once again. Finally the last down candle in this
price
waterfall closes on average volume, followed by the first up candle of the
session. A
weak response if ever there was one, with a deep upper wick and narrow
spread with
above average volume. This is hardly a market that is preparing to reverse at
this
point. The next candle is perfectly valid, a narrow spread up candle with
average
volume – this looks fine.
Then we see a repeat of the first candle in this sequence of up candles, but
this time,
look at the volume – it is extremely high. This is sending a LOUD signal that
the
market is VERY WEAK. If this were buying volume then the market would
be rising
fast – it isn't, so it must be selling volume. Everyone is selling and trying to
get out
of the market before it collapses, with every attempt to rise knocked back by
the
pressure of selling. The next candle is even worse, sending an even stronger
signal,
if any were needed, that everyone is selling and the market is now incredibly
weak.
Here we have ultra high volume and a market that is going nowhere. The
price
spread is narrow, and if the volume were buying, then the market would have
risen.
The insiders are propping the market up, selling stock accumulated in the
price
waterfall, before taking it lower.
The next two candles give no clues, narrow spreads with low volume, then
the
market sells off sharply, as expected, and validated with ultra high volume, as
it
lurches lower once again. The next candle hints at stopping volume once
again with