Volume Spread Analysis

3 September 2022, 09:25
Young Ho Seo
1 279

Introduction to Volume Spread Analysis

In the volume spread analysis, Richard Wyckoff believed that the market shows the sideways move before making a strong bullish rise or bearish fall. Practically, the sideways market can be analysed by several different methods including the statistical method and pattern recognition method. He pointed that this sideways movement is the key area for our trading. He named this key areas as accumulation and distribution respectively for bullish and bearish trading. The key area consists of two prices forming a box zone or trading zone. The trading zone is where you consider your entry as well as managing your trades.

Excessive Momentum Indicator

Then how to find this accumulation area and distribution area ? It is even better if we can detect them mecancially so that we can trade more efficiently. The best mechanical way to detect these trading zones are using the excessive momentum in the market. Excessive momentum could possibly point out some anomaly movement or anomaly momentum in the financial market. Excessive momentum can provide you good entry for your trading. During Excessive momentum, this balance is broken. It means that the continuation force was greater than reversal force since the trends was driving further beyond the defined range. Now probably you are starting to make some sense about excessive momentum. That is good. Your intuition will start to tell you that this excessive momentum is significant joint in the price movement where forces are conflicting. For your information, the trading zone detected by excessive momentum indicator can be used for both continuation and reversal trading setup. The screenshot below shows the reversal trading setup. In the reversal trading setup, we expect the trend to reverse around the zone.


In the screenshot below, we show the case of continuation trading setup. In the continuation trading setup, you are using the trading zone to trade with the continued trend. You might be wondering if there is ways to predict the trading direction. To help you to predict the market direction, we designed the Volume Spread Pattern Indicator. With Volume Spread indicator, you can find out the strength of bull and bear inside the trading zone. In short, you can use the excessive momentum indicator to detect accumulation and distrbution trading zone. Then you can use the volume spread pattern indicator to predict the market direction. For your information, without the help of volume spread pattern indicator, you can still trade with the excessive momentum indicator. In that case, you can trade with the trading zone like the horizontal support and resistance. In another words, you are reacting to the market instead of predicting the market direction. Regardless of which strategy you prefer, the excessive momentum indicator is a great tool to detect the accumulation and distribution area. 

Link 1 [ Excessive Momentum Indicator for MetaTrader 4 ]

Link 2 [ Excessive Momentum Indicator for MetaTrader 5 ]

Volume Spread Pattern Indicator

Volume Spread Pattern Indicator is the powerful volume spread analysis indicator that operated across multiple timeframe. Volume Spread Pattern Indicator will not only provide the bearish and bullish volume spread pattern in the current time frame but also it will detect the same patterns across all timeframe. You just need to open one chart and you will be notified bullish and bearish patterns in all timeframe in real time.

Volume Spread Pattern Indicator for MetaTrader 4:  https://www.mql5.com/en/market/product/32961

Volume Spread Pattern Indicator for MetaTrader 5:  https://www.mql5.com/en/market/product/32960


Volume Spread Pattern Detector (Free)

Volume Spread Pattern Detector is the light version of Volume Spread Pattern Indicator above. This is free tool with some limited features. However, Volume Spread Pattern Detector is used by thousands of traders. Especially, it works great with the support and resistance to confirm the turning point. This is free tool. Just grab one.

Volume Spread Pattern Detector for MetaTrader 4: https://www.mql5.com/en/market/product/28438

Volume Spread Pattern Detector for MetaTrader 5: https://www.mql5.com/en/market/product/28439


Both Volume Spread Pattern Indicator and Volume Spread Pattern Detector works well with Excessive Momentum indicator as Excessive Momentum indicator helps to detect the potential Accumulation and Distribution area automatically. Hence, if you are using Excessive Momentum Indicator, then you can use one between Volume Spread Pattern Indicator or Volume Spread Pattern Detector. In addition, we provide the YouTube video to accomplish the basic operations of Excessive Momentum Indicator.

YouTube Video (Momentum Indicator):  https://youtu.be/oztARcXsAVA

If you want to access the free forex trading education, then you can also visit our website here.


Share it with friends: