Interesting ES Volume Fact for today

Interesting Action Today

Something happened today that threw me off track and helped shift me into taking more Short trades when my trend indications were actually saying "go long." This was the Volume Breakdown Delta Accumulation indicator. For those that do not know what it is, it is an indicator that can categorize or break down the volume traded to show if there is more buying pressure or more selling pressure.

Background

In the chart below I have added two versions of this indicator that I will reference from time to time in my other posts.

1. Volume Breakdown Delta - The difference of the buy and sell volume for the current candle.
2. Volume Breakdown Delta Accumulation - A running total for the above VB Delta.

I use the Up Tick and Down Tick option instead of the Bid and Ask option to calculate my Delta values. Both options produce very similar results, but I have found the Up Tick and Down Tick to suit my tastes better and provide fewer "fake out" moves. Usually the Delta Accumulation tracks reasonably well with price action. Meaning both values will make higher highs or lower lows together. When there is a difference or divergence, I feel the Delta often leads the price action in the turn. Nothing is 100% and focusing on the "short term" can be misleading if you don't also step back and compare with the "bigger picture" of price action.

So What Happened

Just look at today's price action compared to the VB Accumulation (VBA). I marked two areas on the chart with Pink trend lines. In both cases the ES made higher highs while the VBA actually chopped it's way lower in the first example and chopped relatively flat in the second time period. Also note the light Blue trend line showing how the ES Price put in a series of higher lows and the VBA put in a series of lower lows.

Once we got past the opening candles of the session, the VB Delta Accumulation drifted lower below the zero line all day. The horizontal Red trend line across the top of the VBA indicator is to highlight where the zero line. Note that while the ES put in new highs, the VBA went up, but still stayed below Zero.

What Does This Mean

To me, the "Big Players" are being sneaky about liquidating their long position that they have built up in the persistent up tend we have been in. They are not being aggressive and coming down in price to sell at the Bid. Instead they are letting new buyers lift the price to take out their long position.

I'm not trying to call a top and I wont call tops and bottoms. I job is to "trade what I see" and follow the price action as it unfolds. I do suspect there could be more price correction on the horizon, but it may just be another 1-day sell off like we have had recently and right back to the "Bull races" again.

Trade Wise, Trade Well

John