4.

No supply
A simple test. The prices have been marked down at the opening, the volume has been low and on that
volume the market has closed on the highs.

There is no selling on this bar and is a sign of strength. The mark down on low volume shows no selling
pressure. To close on the highs also shows no down side selling pressure.

5. No Supply

This indication shows no supply as the market is driven down, into an area where once there was supply.
Therefore demand must be greater than supply and you can expect higher prices.

This is a very strong signal. So strong in fact, that if it appears to fail you should treat your data as suspect
before writing off this indication.

6. No Supply

There appears to be no supply present or demand is overcoming the supply. This is a strong signal.

Supplementary Comments:
Look to the following bars, what are the marketmakers doing?

Low volume up-bars: indicates no demand and you would not expect higher
prices with no demand.

Up-thrusts: The market is still weak and the market has been marked up to
catch stops and to mislead as many traders as possible.

Traders often get caught in a whipsawing action in the market. Stops should
be placed under the last support.

20
7. No Supply Following Bottom Reversal

This can appear as a "Failed Test". A failed test looks like an ordinary test but the volume is too high.
Markets do no like high volume when the spreads are wide. The high volume shows supply. The question is
are the marketmakers willing to absorb the supply?

The following bars should tell you.

Low volume up-bars: The market is not going up very far right now, and will want to test the high volume
area.

Up-Thrusts: The market still looks weak.

21
Reversals:

1. Reversal
These are really shake-outs over two bars. The first down bar puts fear in those traders on the wrong side of
the market, catches stops, and encourages traders to short the market. The following up bar tends to lock
traders into a poor trade if they shorted. The rapid up bar also cuts many traders out of taking a long position
as they now feel the market has gone up to far to get a safe position.

Add more strength if the news is 'bad'

Add more strength if the spreads are wide to ultra-wide.

If the market is still a weak one then although this looks like strength the market can die on you over the next
few bars.

2. Bottom reversal

As a market falls, at some point the 'herd' will panic and sell. If professional money decides to buy into this
selling because the price levels now look attractive to them, this action will create high volume on a down
bar.

The news will be 'bad'

If the next bar is up on a wide spread closing on the highs this has the hall mark
of a bottom reversal and a sign of strength.

Supplementary Comments:
If the program fails to pick up this subtle indicator it is unlikely you will see this
because the news will have bad and lower prices predicted. It is not easy to be
a good trader!

22
3. Bottom reversal

A Bottom Reversal or a 'Test over two bars', is designed to shake you out of the market, catch your stops or
to mislead you as much as possible. They mostly happen on the market lows. If the next bar is wide and up
with volume average to high (as interpreted by the program) you would expect higher prices.

If the next bar is reluctant to go up on low volume and perhaps a narrow

spread then this is 'NO DEMAND'. You may have strength but the market is
not ready to go up yet.

What are the following bars telling you?

Testing into the same area: Strength.

Low volume up-bar: No Demand.

Up-thrusts: additional weakness.

4. Reversal After Effort to Rise, Followed by Drive Down

High volume up-bars closing off the highs indicates that supply is present.

Things to Look Out For:

The situation can suddenly change if the market is still strong.

Any immediate down-bar with reduced volume would indicate that, yes, there
was supply present, but the supply must have been quickly absorbed by the
marketmakers. This is now a sign of strength.

A down-bar on low volume shows that there is little or no more selling from
the market makers. If there is no selling then the market is very likely to go up.

However, an immediate down-bar on high volume would indicate further

weakness.

Please see the TradeGuider Primer for more information.

23
5. Top Reversal

Markets often have a turning point on a sharp up bar, closing on the high, into recent new high ground. This
is then followed by a sharp down bar, closing on the lows. We call this a Top Reversal.

This action tends to encourage traders to go long in a weak market, or frighten those traders that have a
short position into covering it. This is liable to happen on the first up bar. The second down bar, closing on
the lows, then locks the traders into a poor position.

For this signal to be a legitimate one, there should be some sort of weakness
in the near background, like:

high volume up bars

narrow spreads
a marked decrease in volume

Things to Look Out For:

Look to the following few bars for clues as to the sentiment of the market
makers. For example, if the very next bar is down on a narrow spread, and
the volume is less than the two previous bars (which is considered "low"
volume in TradeGuider), then you would see that professional money has little or no interest in lower prices,
despite the weakness.

Tip:
Remember, it is the activity of professional traders that we are interested in. Are they showing interest in
this sign of weakness?

Please see the TradeGuider Primer for more information.

6. Top Reversal
Top Reversals are often seen after there has been a rally. They appear as a wide spread up-bar which
closes on the highs, sometimes even gapping up. The news will be 'good', which prevents you from seeing
that this is a top. This type of price-action is designed to catch stops, panic premature shorts, and encourage
traders to go long.

Things to Look Out For:

This is an especially strong indication if the first leg up was on low volume, showing 'no demand'

Please see the TradeGuider Primer for more information.

24
Selling:

1. Selling pressure
This is the opposite of stopping volume. Here the high volume is on an up bar. Give more emphasis if the
volume is ultra high.

Things to Look Out For:

Once this sign of weakness has appeared, if the market is still strong, expect
the prices to drift down, or sideways, with little or no selling pressure from the
professional players until the market has recovered from this bout of selling.

On rare occasions ultra-high volume on up bars can be bullish. This is

practically always in a futures contract. Without knowing exactly what the
professionals are up to in the pits, it is best to step aside and let it pass by.

If the market starts to go up, closing on the highs after ultra-high volume, it is
best to assume you have a bullish market. It is possible that the data has
been withheld and when released it is appearing on up bars when in fact it
should have appeared sooner, on previous down bars.

Please see the TradeGuider Primer for more information.

2. Increased Selling, Supply Present

Supply appears to be present (may refer to the previous bar).

A high volume up bar, especially on a narrow spread, closing in the middle or low, indicates weakness.

Things to Look Out For:

If the next bar is down closing on the low, this adds to the weakness (the
professionals want to lock you into a poor trade).

If the market is still strong, you would expect to see a down bar during the
next few bars, accompanied by low volume. If you see a down-bar on a
narrow spread, closing in the middle or high, this will add to the strength.

These down bars on low volume show that there is no more selling. If there is
no selling, then the market is very likely to go up.

Please see the TradeGuider Primer for more information.

25
3. Possible Hidden Selling in High Volume

Supply appears to be present.

Here, we see a rapid mark-up on either low volume (no demand), or very high volume (supply swamping
demand). The next bar is down, closing on the lows, indicating that supply is present.

Things to Look Out For:

The situation can suddenly change if the market is still strong.

Any immediate down-bar, with reduced volume, would indicate that, yes,
there was supply present, but the supply must have been quickly absorbed by
the main players. This is a sign of strength.

A down bar on low volume shows that there is no more selling. If there is no
selling then the market is very likely to go up.

However, if the market is weak, then 'no demand' up-bars will be present
during the next few bars, showing that the main players are withdrawing from
the market.

Please see the TradeGuider Primer for more information.

26
Shake-Out:

1. Shake-out

This appears over two bars and indicates strength.

Supplementary Comments:
The previous bar has shown strength, this has caused interest with
professional traders. Ignore this signal if the previous bar is up on very high to
ultra-high volume (supply swamping demand)

We always have to look at what the market makers are doing. Here they have
marked the market up because of the strength on the previous bar.

2. Shake-out

A down bar after you have already seen a down move in the market followed by an up bar closing higher
than the high of the previous bar must be looked upon as strength.

Supplementary Comments:
This might be tricks by market makers or others.
You can tell by following the next few bars because
any false move by market makers cannot be
sustained more than a few bars before the true
nature of the move is given away.

Look for up bar on very high volume with the next

bar down closing on the low.

Look for up bar closing middle or low especially on a

narrow spread.

Look for up bar with the volume is less than the previous two bars, especially is the spread is narrow.

27
3. Shake-out
For markets to keep going up there has to be periodic shake-outs. They will arrive when least expected on
BAD NEWS.

Supplementary Comments:
After you have already seen substantial falls, sudden bad news will result in an additional sharp down move.
This creates panic selling from many traders who refused to sell earlier. However, if the lows have fallen
down into recent new lows and the price reverses to close on or near the highs either on low volume (little or
no supply) or high volume (market makers absorbing the supply) this is usually now a good point to enter the
market.

To keep going up the markets must have LOSERS. Somebody has to pay for the higher prices. This is how
the markets work. A selling climax, shakeouts, testing, bottom reversals are all signs of strength because
this kind of price action frightens many traders into selling their holdings at low prices, catch stops and
encourage many to go short in a strong market.

You may see a 'test' in a very weak market and to recognize these you will have weakness in the
background not strength. A main rule associated with a 'test' in a weak market or a bear market. The
market should respond to a test in a positive way. That is, immediately going up on average to high volume.

If the market is reluctant to go up after a 'test' then the market is still weak. Market makers will have seen the
apparent lack of supply on the 'test' if they where bullish they would buy the market fast after any green
signal in a falling market.

The market will tell you if it is really bullish or this is just a pause in a weak market.
Low volume up-bars.
Upthrusts
Very high volume up-bars with a narrow spread.

4. Shake-out
A Bottom Reversal or a shake-out over two bars.

Supplementary Comments:
It is designed to shake you out of the market, catch your stops, or to mislead
you as much as possible.

They mostly happen on the market lows. If the next bar is wide and up with
volume average to high (as interpreted by the program) you would expect
higher prices. If the next bar is reluctant to go up on low volume and perhaps
a narrow spread then this is NO DEMAND. You may have some strength but
the market is not ready to go up yet.

What are the following bars telling you?

Low volume up-bar: No Demand.
Up-thrusts: additional weakness.

28
5. Shake-out
This type of action can appear on high or better volume. If the volume is high, very high or ultra high this
could easily be CLIMATIC ACTION however do not rush in when the volume is high, wait and observe the
reaction of the market makers on the following bars.

Supplementary Comments:
If the next bar rallies strongly but the close is well off the highs and again the
volume is high or better, this will tell you that there is heavy selling in the
market (remember weakness always appears on up bars) and you would not
expect higher prices at that moment.

If the following bars are going up on LOW VOLUME this tells you that there is
no demand in the market from the marketmakers or main players and you
would certainly not expect higher prices. NO DEMAND shows unwillingness
of the main players to participate in any bullish behavior, despite the
indication of strength that has appeared. Why? because they know more
about the market than you do and are probably still expecting lower prices.

If the market starts to whipsaw and is basically going sideways, the market may be building a cause for the
next move up. Low volume down bars within the same price range of the area of the first high volume down
bar (arrow bar) is telling you that the market is strong. It is strong because there is no supply in the market. If
there is no supply then the market is going to go up.

6. Shake-out
Demand appears to be overcoming supply. The following bars are important, let the marketmakers tell you
what is going on. Low volume up bars shows no demand, which is an unwillingness of the marketmakers to
participate in a rising market because they know the market is still weak. Low volume is considered to be
volume less than the two previous bars.

Supplementary Comments:
A high volume up bar, and on that high volume, the market is closing in the
middle or lows, Supply is overcoming the demand.

Down bar with low volume closing near the highs during the next few bars will
show strength.

Additional testing is also a sign of strength.

You would expect the market to respond to a sign of strength. If the market
now dies on you due to these weak bars appearing this would indicate lower
prices.

29
7. Shake-out/Springboard

This has the appearance of a shake-out. Exercise caution if the bar has gapped down as this could indicate
hidden weakness.

Supplementary Comments:
Caution if you are using a short timeframe. The mark down may look substantial on the screen but may in
fact be small.

Shake-outs usually occur on bad news of some sort. The market has been rapidly marked down on the
news, however, to close on the highs would indicate strength. Basically the prices have been marked down
to shake the market out, to test the supply in the market, to catch stops and to mislead as many traders as
possible in the process. If the price now recovers to close on the highs this would indicate that either supply
had dried up (low volume) or that demand overcame the supply (high volume).

As with all the indications now follow the bars carefully and see how the market makers are responding to
the sign of strength. Low volume up bars indicate their withdrawal from the market. The market failing to
respond upwards, or even lower prices indicates unwillingness of the marketmakers and main players to
participate in a bullish market despite the indication of strength. An up-bar closing in the middle or lows on
high volume will show weakness. All these indications happen within the next few bars.

30
Stopping Volume:

1. Stopping volume

Rapid falls on high volume will shake the market out. Any down bars on low volume especially closing in the
middle or high indicates that there is little or no professional selling. If there is no supply then the market is
likely to go up.

2. Stopping Volume

This indicator should appear after a substantial fall has already taken place.

As a market falls a point will be reached when weak holders (traders on the wrong side of the market) will
start to panic and start selling their holdings. This is seen on a down bar after there have already been falls.
If the price closes well off the lows then we have to assume that the market makers stepped in and have
absorbed most of the selling from these weak holders.

Supplementary Comments:
Markets do not like very high volume because it always indicates that there is
supply in the market.

As with all indicators read the following few bars carefully (next 4 or 5 bars.)

If the market is still weak you will see:

Upthrusts, especially on very high volume.

Up bars on low volume shows weakness (no demand.)
A high volume up bar followed by a down bar, perhaps with a reluctance to go
up.

A reluctance to go up is seen in up bars on low volume and narrow spreads AFTER a sign of strength has
appeared.

If the market is strong you will see:

Low volume down bars.

Testing on low volume.
None of the signs of weakness as described above.

31
3. Stopping Volume
To stop a down move demand has to overcome the supply that is causing the down move. This by its very
nature has to be on down bars and is seen after a down move has already taken place.

High volume on a down bar closing on the highs after a down move has already taken place would indicate
panic selling from those traders on the wrong side of the market while the marketmakers have decide to buy
this stock, this accounts for the high volume and the market holding. This indicator must have evidence that
the supply seen in the very high volume is gone.

Any testing now on low volume at this price level becomes a very strong sign
of strength in the market.

Supplementary Comments:
A gap down bar after you have already seen falls (probably on 'bad news')
can also shake the market out. If the volume is low then there is no supply
and the market is likely to go up. However, you need a base to form after a
bear market. You have to have a cause for the market to go up.

4. Stopping Volume

A down bar into fresh low ground followed by an up bar on a wide spread
closing above the previous bar tends to show marketmakers trying to shake
the market out.

Supplementary Comments:
The first down bar is a mark-down then a rapid reversal is the marketmakers
doing their best to lock traders out of the market by a rapid move up.

Those that shorted on the first down bar now have to cover at a loss. Those
that have hesitated feel they have missed the up move so wait. They are
liable to be sucked in at a higher price.

32
5. Stopping Volume

To stop a down move, demand has to overcome the supply that is causing the down move. This by its very
nature has to be on down bars and is seen after a down move has already taken place.

High volume on a down bar closing on the highs after a down move has already taken place would indicate
panic selling from those traders on the wrong side of the market while the marketmakers have decide to buy
this stock; this accounts for the high volume and the market holding.

Supplementary Comments:
Any testing now on low volume at this price level becomes a very strong sign
of strength in the market.

Some types of stopping volume are seen over two bars. The first down bar is
on very high volume closing on the lows, while the second bar is up.

If the volume on the down bar is Ultra High this could show that there is such
high selling going on that even the market makers have been unable to
absorb the selling (they make mistakes as well).

6. Stopping Volume

Down bars with the volume high while the next bar is up closing on the highs indicates some support or
buying has taken place.

You would expect a clear Test to take place before any up-move.

Supplementary Comments:
Look to the following bars. Let the marketmakers tell you what their view is.

Up bars on low volume indicates No Demand.

Up bar on high volume and a narrow spread indicates weakness.

Up-Thrust indicates weakness.

All these signs are very important after any green signals.

33
7. Stopping Volume

You would expect to see a positive result from this sign of strength.

Supplementary Comments:
If the market is still weak you will see up bars closing in the middle or low,
especially if the volume is low ( volume less than the two previous bars is
considered low).

This shows that although the market has made an attempt to go up

professional money is not backing the move. If there is 'No Demand' from the
professional players then the market is not going up very far.

8. Stopping Volume

These are mini-shakeouts by market makers.

Supplementary Comments:
A sharp down bar followed by an up bar with the high and close higher than the previous bar must be looked
upon as strength.

Or a down bar on very high volume followed by a decent up bar must also be looked upon as strength.

They may want to test this so now lookout for down bars on low volume or on narrow spreads closing in the
middle or high showing no selling pressure.

This signal may only produce a minor rally. This you can also see coming by up bars on narrow spreads
closing middle or low on low volume.

34
9. Stopping Volume (Climactic Action)

Looks like a bottom reversal or a test over two bars. It is designed to shake
you out of the market, catch your stops or to mislead you as much as
possible. They mostly happen on the market lows.

Supplementary Comments:
If the next bar is wide and up with volume not low you would expect higher
prices.

If the next bar is reluctant to go up on low volume and perhaps a narrow

spread then this is 'NO DEMAND' Caution if the volume is ultra-high. Markets
do not like ultra-high volume on up bars supply may be swamping demand.

What are the following bars telling you?

Low volume up-bars: 'No Demand'.

Up-thrusts: additional weakness.

35