TechniTrader Beginner Education "Bottoming Stock Formations" by Martha Stokes CMT

Using the Time Segmented Volume Indicator to Identify Stock Bottoming Formations


One of the tougher technical patterns to determine is when stocks are going to stop trending down and begin bottoming stock formations. This is especially important for Swing Momentum Traders as most bottoms have periods of Momentum action as energy builds up, due to larger lot buying. This is a form of liquidity taking, which triggers High Frequency Trading action and big Velocity runs.

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Being able to identify when a stock has reached that final low is often challenging when only using traditional stock indicators and price action. When a Trader incorporates more Volume Indicators a final low can often be identified sooner, allowing for time to prepare for the Velocity runs out of a bottom.

One of the best Hybrid Volume Oscillators to use in order to find the final bottom low is called Time Segmented Volume Indicator TSV, because it has a tendency to show a bottom V, W, or U pattern since it is a line indicator. The Time Segmented Volume indicator also oscillates via a center line, which adds additional easy to read patterns for the beginner to novice trader.

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time segmented volume indicator for tc2000 webinar - technitrader

See chart example below with TSV in the bottom chart window, showing a U Bottom.

chart example with tsv in the bottom chart window showing a "u" bottom - technitrader

The Time Segmented Volume Indicator is particularly strong because it has all 3 pieces of data in the formula, and is a Cumulative Indicator rather than an indicator based on Moving Averages. This empowers the analysis with stronger signals and far more reliable entries for the Momentum trade.

Combining the Time Segmented Volume Indicator with new candlestick patterns such as the “Sandwich Candlestick Pattern” and pre-momentum action, makes it is easy to recognize and allows earlier entries for Swing Traders in bottoming stock formations.

Summary

Adding the Time Segmented Volume Indicator to the analysis of stocks for Swing and Momentum Trading can provide additional signal patterns that give earlier indications of momentum energy building, due to Institutions Quiet Accumulation and large lot Professional Traders buying the stock after the accumulation. Professional Traders candle patterns are far more reliable and consistent than trading with Retail Traders and Small Lot Investors, and finding those patterns is easier when you apply this indicator to the analysis.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDS with every course.

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