Calibrating volume and open interest at support and resistance

The four-way condition read

Each trade is treated as simultaneously revealing price, volume, open interest, and the time needed to begin and complete a move. Those four readings, taken together, are presented as a continuous composite of current internal market strength or weakness.

The four-way condition read uses those same four readings as one combined description of current market condition.

What price-only systems leave out

Exclusive reliance on packaged trading systems and price-only mathematics is described as causing traders to miss many market-imparted signals.

Relative calibration first

The labels up and down for volume and open interest are defined as relative and must be calibrated to each contract or stock's normal activity. Relative calibration means calling volume or open interest up or down only after comparing it with that contract or stock's own typical activity.

TradersWeek editorial instruction: finish that scaling to the market's own normal range before any other condition is assigned. This sequencing is editorial and is not attributed to the archive.

The support-resistance volume test

Price and volume behavior at support and resistance is specified as a required observation when interpreting the indicators. The support-resistance volume test is watching how price and volume behave when trading reaches a known support or resistance area.

Accumulation or distribution near tops and bottoms, and the extent of corrections plus their accompanying volume inside the prevailing trend, are listed as conditions to watch. Accumulation and distribution means inferred buying or selling pressure near bottoms or tops taken from the combined indicator read. Correction-with-volume means how far a countertrend move travels and what volume accompanies it inside the prevailing trend.

TradersWeek editorial reading: after relative calibration, let the support-resistance volume test ask whether the prevailing trend is being accumulated, distributed, or only corrected. That use of the test is editorial and is not attributed to the archive.

Later-price confirmation

Interpreting the four indicators is characterized as a judgment skill that includes reversing an earlier assessment when later events contradict it. A condition read is instructed to include the prevailing trend and later price action that confirms or challenges the first assessment.

Later-price confirmation is that recheck: comparing the first four-way condition read with subsequent price action and reversing the read when later action contradicts it.

Indicator relationships and their interpretations are collected in a single summary exhibit.