Hey Trader,
Analyzing [GM] General Motors Company -
Testing Recent Highs, Exhibiting Volume Inconsistencies
Anthony Speciale here with Hawkeye Traders. I hope this post finds you in high spirits.
Today, we're going to dive into a detailed analysis of General Motors Company (GM), incorporating crucial volume analysis to identify a potential topping pattern.
If we break this current pattern, it could signal a strong buy.
I recorded this session on July 13th, with an empty chart, and we'll perform short-term analysis focusing on the top.
Trend Analysis: The Basics
From a bird's eye view, it's clear that GM's price has been rising steadily since November of last year.
As a strong advocate of trading with the trend, I also recognize the importance of knowing where the trend currently stands.
It's vital to avoid buying at a peak unless there’s a valid reason to believe it will go higher.
To start, I’ll draw a few simple trend lines using rays, which extend indefinitely, making it easier to see the market's direction.
By connecting the pivot lows marked by Hawkeye Pivots, we establish that the general trend is upward.
This initial step gives us a broad perspective without overcomplicating things.
Constructing a Channel
For those unfamiliar with channel structures, let’s keep it simple.
By copying our trend line and placing it at the highest point between the selected lows, we create a basic channel.
This helps us understand the market's containment based on prior price action.
Analyzing Key Levels
Next, we analyze the significant highs within the channel.
By marking these highs with horizontal rays, we can observe key resistance points.
For example, the last test of the channel showed notable resistance, with price struggling to break through.
Particularly, I’m focused on a recent high marked by a candle with substantial buying volume but a close in the lower third.
This indicates potential resistance. Moreover, the highest price traded in the past seven to eight months lacks enthusiasm from buyers, which is concerning.
Identifying Divergences
By drawing a box around the concerning highs, we highlight the area where buying volume decreased significantly despite a high price.
This volume-price divergence signals potential issues.
This situation is known as a volume climax, followed by an immediate rollover and a subsequent high on lower volume.
Potential Outcomes
If new buying momentum pushes the price above this critical area, we might see a continuation of the uptrend, potentially reaching a high 9.5% above the current level.
However, if the price fails to break above resistance, it suggests a possible topping pattern.
Applying Volume-Price Analysis Across Time Frames
This volume-price relationship is essential across all time frames, from daily to minute charts.
Understanding this interaction is foundational for any consistent, disciplined, and profitable trading plan.
Join the Conversation
If you're eager to learn more about the relationship between volume and price action, I invite you to join our upcoming training webinar.
Here, we'll delve deeper into this topic and help you integrate these insights into your trading strategy.
Additionally, we offer the Hawkeye Volume Mastery Series, providing extensive resources and indicators compatible with platforms like TradeStation, TradingView, NinjaTrader, and MetaTrader.
These tools will enhance your trading across various markets, including stocks, futures, forex, and cryptocurrencies.
Final Thoughts . . .
Understanding the volume-price interaction is crucial for successful trading.
By focusing on these fundamental components, you can simplify your trading strategy and overcome common hurdles.
Click the link below to join our training webinar and start mastering the craft of volume and price action analysis.
Thank you for reading, and I look forward to seeing you in our next session!
Happy Trading,
Anthony Speciale
Speciale Analysis
About the Author:
Anthony Speciale is a seasoned market analyst with over 13 years of experience trading. Through his platform, Speciale Analysis, he offers in-depth market analysis, interpretation, and expectations designed to help all types of traders, at every skill levels reach their full potential.
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NOTE: Trading involves significant risk, and it's essential to approach it with a well-defined strategy and a disciplined mindset. This blog post is intended for educational purposes and should not be considered financial advice. Always conduct your own research and consult with a professional before making an financial decisions. For further risk related information, please refer to: www.specialeanalysis.com/disclaimer
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