ZL answer to Pete's FKLI query

Hi Pete,

It really so seems PL is an eager beaver learner in FKLI. Pete, your question as per below >>>>>>>

QUOTE

Part 1: It was indeed a bad 'SELL' at 873 when the prices were at the break MID BB RESISTANCE. But 'SELL' at 876, I was confused because the prices were at the TOP BB while expanding(5-min chart). It seems to me that all this while the prices might go up further when the prices at TOP BB during expansion as I got the idea from you in Bursa-Chat Box. If it was a GOOD SELL, was it because of high volume together with STOCHASTIC at OVERBOUGHT level ?

UNQUOTE

ZL's answer to above >>>> Pete missed out on the timing of volume applications. The FKLI 5 mins chart & inside commentaries / highlights will self explain both Pete's FKLI trade executions.

The Bollinger Bands is indeed a good indicator for SUPPORT & RESISTANCE but always remember TA is SUBJECTIVE and forever will be. Many outside factors and sentiments can make us TA freaks look even more freakish without obligations. A trend landscape can change overnite or within the next 10 minutes effectively by unforseen circumstances such a geopolitical or domestic politics, natural disasters, micro & macroeconomical shifts, wars and even rumours. Those are just some sensivities mkt traders are exposed and vulnerable to every single day of their trading life. That is basically, the meaning of subjectivities.

Technically, a mkt trend is usually more consistent and characteristically linked to indicators and oscillators signal emission effects. The readings are more than just "at the top or bottom".ZL will include some trade effective pointers that can also change or make a trend. Hope this 'new' chapter in PL's learning endeavours will help unlock some confusions and assist PL better in future tradings especially the part why ZL always highlight the VOLUME pattern of a trade. If PL can understand the below usage of VOLUME & OPEN POSITIONS (aka Open Interest) then it will self explain PL's questions and hopefully clear some of your doubts.

Some rules of thumb for interpreting changes in volume and open interest in futures market are as follows:

# A rising volume and a rising open interest are confirmation of a trend.

# A rising volume and a falling open interest suggest position liquidation.

# A falling volume and a rising open interest point to a period of slow accumulation.

# A falling volume and a falling open interest depict a congestion phase.

Volume and open interest can be used in a practical sense to guide one's trades as follows:

1. Open interest increases during a period of an exhibited trend.

2. During the accumulation phase, volume may decline while open interest builds, but volume occasionally spikes.

3 Rising prices and a declining volume or open interest indicate a pending change of direction.

These rules, however, have exceptions, especially on days or at times when volume is expected to differ from the "norm". For example, volume is usually lighter on the first day of the week, on the day before a holiday, and during the entire festival period. Also volume may actually be heavier on Fridays and Mondays during a trending market. Liquidation of positions often occurs before the weekend, with positions being re-entered on the first day of the week. Finally, volume is heavier on a triple witching day, when stock-index futures, stock-index options and stock options all expire on the same day.

In a nutshell

Volume and open interest are integral measures to guide one's trading decision on the futures markets, but as always, these indicators should be considered in relation to extraneous market events.

NOTE : Pls bear in mind the reading disciplines for a 5 mins / 15 / 30 / hourly / daily / weekly or monthly remains the same only that a 5 mins indicator / oscillator reacts 12x faster than a 60 min, say, VOLUME indicator. There may be only 10 lots traded over the last 5 minutes but within the hour, the volume can possibly jump to 120 lots or more. That may look AWESOME in the hourly volume but hardly significant in the daily volume indicator altogether. There is a whole lot of difference between the INTRADAY & DAILY timeframe settings.

HAPPY TRADING & GOODLUCK2U

Regards,

ZL