Volume Sum DYO

Interpretation of volume, like all market indications, is not a precise science. The purpose of this tool is to provide insight into volume behavior relative to price that might otherwise be lost. There are two marked up charts, a 3-minute bar chart and a 532-tick chart, showing various ways the indications might be interpreted.

The Volume Sum DYO keeps a tally of volume for a run of UP (or DOWN) bars, draws a histogram of the running total, and resets itself to zero when the run completes. Doji bars (ie, Close=Open) are counted as part of the run in progress. This means there will be places where the histo overlaps. This is reasonable as a Doji indicates indecision and the volume could go either way. Note too that I have not included a value axis. This is by intent, as the *relative* values and shapes are what are, in my opionion, of best use in this tool.

Dowload Ensign template

In the 3m chart example shown below, at about the first 13.27, there is a run of 5 up bars, shown by the 5 green histo bars. Because the very next bar was down, the value resets, and a red histo bar is painted. I show various divergence instances, but one important value, in my opinion, is in giving structure to the very low volume periods, such as the 11.27-13.27 period indicated, and to the climax-like runs such as the ones at 9.57 and 10.57.

Volume on tick charts is often very uniform, not allowing much room for interpretation. However, as with the minute chart, summing volume reveals structure that might give traders useful information. Here are some examples of how this might be used.