Volume and Open Interest
fIgure 6.33 High Volume Reversal Bar on the Daily Chart of PowerShares DB U.S.
Dollar Bullish Fund.
Courtesy of Stockcharts.comIn Figure 6.33, we see another example of a high volume reversal bar occur-
ring around May 23, 2011. Notice the bearish divergence in volume and on the
MACD leading up to the high volume reversal bar. This is a bearish scenario, and
is regarded as potentially more reliable since the bearish reversal bar occurred
within a larger downtrend. We see prices decline after its formation. We also see
a high volume continuation bar indicated at Point X. Similarly, high volume con-
tinuation bars are regarded as potentially more reliable if they occur in the direc-
tion of the predominant trend.
In Figure 6.34, we see a high volume reversal bar occurring around the end
of October 2011. This reversal bar also occurred at a historically overextended
volume level, as indicated on the chart.Constant Volume Charts Constant volume charts are especially useful for pin-
pointing reversal bars on high or low volume. Since the volume is fixed for each
bar, it will be relatively easy to identify potential reversal bars by just referring to
the bar range alone and its height in relation to the rest of the bars. In Figure 6.35,
we see two types of reversals bars. The narrow range bar is bearish and is indica-
tive of sellers taking control, while the wider range bar is indicative of a lack of
interest in the price rise.