Hey everybody, nice to be with you. Mike Fairbourn here. Coming back for swing trading, our swing trading class. Looking forward to our discussion today and really talking about a topic that I really love to address, and that is volume: what is volume doing around the swing trade? So I want to talk today about three volume indicators that can lead price indication. Actually, one of those is volume itself. The other two are derivatives of that volume or tied connected to that volume, but can be very, very helpful in a lot of situations or kind of understanding, hey. Is there buying pressure going on behind the scenes ahead of this swing trade? And does that maybe lend itself to a higher probability for a bounce higher? A lot of traders and investors will look at volume in that context.
So I'll look forward to going through that with you. I'm joining the chat by my good friend, colleague here, Cameron May. Appreciate Cam. In fact, I think this is Cam's spot here. I know I had a spot helping Cam out in his chat as well. So I'll look forward to going through that as well. But great to have him on board. Folks, welcome to all of you. It's great to have you here. Any questions, comments you have, love to see those coming through in the chat because I do like to go through and review those when we're done as well. Sometimes I'll get requests in there to look at certain things, but really looking forward to talking about some of the swing trade setups we've got.
So without further ado, great welcome to all of you. And let's dive into some disclosure items here. So information here today is for informational purposes only and should not be considered an individualized recommendation or endorsement. Any particular security, chart pattern, or investment strategy. Now, options do carry a high level of risk; they're not suitable for all investors. Not sure. We might dabble. We might look at some options. That's the great thing about this class is we can look at stocks, can look at options. In fact, we can look at spread trading. That's our next bullet point right there. Spread trading must be done in a margin account. But next, the Paper Money software application is for educational purposes only. Now, Schwab does not recommend the use of technical analysis as a sole means of trading.
So if you're looking for a way to trade, you can lay out lots of other means of investment research. Investing does involve risk, including the loss of principal. Some key points listed below, too, on stop orders. Now, a stop loss order will not guarantee an exhibition at or near the activation price once activated. They actually compete with other incoming market orders. With a stop limit order. You risk missing the market altogether in a fast moving market. A fast moving market might might be possible. Em milkshakes or impossible, I'm sorry, to execute in order at the stop limit price or better. So you might not have the protection you'd sought. Quick note as well, Schwab does not recommend the use of technical analysis as a sole means of investment research and past performance of any is no guarantee of future results.
Okay. All right. Well, folks, second week for our class here, it is a new class and I want to talk a little bit more detail as we dive into reviewing the current market, illustrating some of the swing example trades, but let's hit again, just a couple of the slides, the general slides. I think they're really great, especially for many of you that are just getting on board with swing trading right now. Wanted to hit a few of these just to get the ball rolling here. With swing trading, we're looking for generally just within an upward trend, that move that follows a consolidation in a lot of cases. It may occur. It's not always around a bull flag, but oftentimes it is. The trend is higher. You've got higher highs, higher lows.
We're waiting for a pullback and that is a shorter-term pullback as it states here, days to weeks. And that right there is illustrated, that pullback off of the trend. So counter to the trend, it's counter-directional to the upward trend. It's a more moderate sideways move down. And a lot of times, as you can see, that have been drawn here by our, I guess, our artist here or whoever it is, they put together this slide. I think they did a great job of illustrating what that flag pattern looks like, folks. I think you can see the flag right there illustrated. It's more of a moderate pullback. This is really kind of defining a lot of cases as the possibility of a bull flag setup.
And the trade that we're looking at with the swing trade, swing, swing trading, this move that follows right here. It's that follow-through run that lasts approximately three to 10 days. I did say there was a way where we could extend that out a little bit further, perhaps, if it's really quite a strong move. We might take some off the table. It's somewhere within a three to 10 day range. Those are the numbers generally. But we're just looking for really the strongest part of the move right here to the upside is what we're focused in on. I'm going to clear this off and just highlight some of the things that we're going to be looking at. I'm going to highlight this once again. A lot of times within our class, what we're looking at is the initial target.
And so I'm just going to just call it, you know, we can call this T1 over here. Target one is probably the top of the flag itself. And so if we had an entry point over here breaking above that trend line, believe it or not, yeah, some traders are only looking for, and let's count it. I mean, off the bottom, one, two, three, four, maybe five days. Maybe that is our fifth day right there. And folks, all we're simply doing is we're taking profit. We're taking profit. We're taking profits at the top of the, of the flag itself. Now, I know many of you know this, but with the pull itself, with the flag itself, if not all of you know this, but the flag itself, if we're measuring this distance, I'll just put a big P right here in the middle price.
That's the price move between the bottom of the beginning-you could say-of the flag up to the top of the flag pole, the pole itself. We take that level and we measure that same distance off the bottom here. Again, I'm just going to eyeball this. I'm not exact when I do this, but it's just an eyeball here. It's kind of hard to do anything but eyeball it because we really don't have kind of a scale to use. But let's just say that this price range here, and I'll illustrate it, is going to be comparable to the follow through of the bull flag. And that's what makes price patterns so interesting and unique is that they do have targets. And that right there could be construed as T. T2.
T1, T2, you've got a target range, one potential target range. You've got a target range up here when that distance is met, right? When that full price range up top here, let's put a P in there again. When that range is met, that's when you would get potentially just the full range. And so sometimes within the trades we're looking at, a trader might do this. If they're buying in here, let's highlight this down here. Let's just say, for example, if they're buying 100 shares at the entry point, whether it be a K hold, that is a close above the high of the low day, let's just point to it right there, say for example, or a trend line break, which is right there, which might also be a couple days of a confirmation trading higher.
We talked about that last week. But with that hundred share entry, at T1, they might take off minus. One half of that position, or 50, for example, half the position there. At T2, they might take off the other half. So there are ways to use a little bit of money management to be a little bit clever in these kinds of scenarios. So I'm going to hit this for probably the next, maybe a couple more weeks, just to make sure we get that down, because it's going to be so illustrative in terms of what we're going to be doing in this class. And you'll notice a lot of the setups, the setups that we look at, we'll kind of mirror some of these, these sort of slide indications here, these slide diagrams.
Okay, so let's do this. We kind of went through all this. Now the market has still been up. I want to dive into the market. There is the bear flag. We'll talk about that. What defines the two is the bear flag is, in fact, trading down. The trend is bearish, lower lows and lower highs. Sometimes this kind of looks like a bull flag sometimes. I mean, I've been fooled. You know, I've got to go back and look at the trend. You know, certainly. Here's your move up. All right, there we're flagging. It's a bull flag. Well, you know, it went with the trend which often does, which it does often so many times, right? It drops down, and then the trend continues lower.
The bottom line is, is when we look at these swing trades tied into these price patterns, we're really connecting them to the trend. So it's kind of a core sort of component where we're trying to get an estimation of what direction it will go. And we use the trend to help us in that regard. All right, well, let's do this. Go to the market right now because there's a little bit to discuss on the market. It's been a little bit volatile, in fact let's just go into it right now. In fact, I'll scoot this up; we'll just type it in here is SPX right there, okay? So, the S&P 500 index I've outlined, I've laid out here a couple of different different long-term moving averages.
I've got the 100 up here in the gold and you can see that we did go below the 100 and we bounced back up above it. Now, we bounced back up above it today; we closed above it uh yesterday but well darn it, we're back down below it again. We've turned negative; we've seen some volatility creep in, certainly after this pullback. Now, we take a look at the markets because it gives us a general feel of what direction we might be using to in terms of the swing trade, of course you want to look at the individual stocks, but it is helpful to see what direction the market's going; it is the market making higher Highs and higher lows, folks.
Right there, that was a higher high that was a high in the market, right up top here, the trend the long-term trend clearly is up, and so using that as a guide, we can look still maybe at the bull flag side, there's clearly some bear flags out there, but we're kind of tying it into the strength of the underlying market. I did see an interesting chart this week, I wanted to throw it out to you guys first in this class, it's really the first class I teach during the week, anyway, so you guys are going to get a lot of things that I, you know, see over the weekend as well, in this class. Uh, initially I'll probably talk about it.
in some of the other classes as well but there was an interesting chart drawn about the presidential elections i've seen historically they kind of overlaid them and it looked a lot like this uh prices will go up to the election uh date like right over here so you got the election so this is like the actual you know the election day i just put e over here so it runs up to the election when when a winner is announced the election then we tend to go a little bit sideways there might be a little bit of a bump after but sometimes we'll tend to go a little bit sideways after so it can it can be a little bit volatile up here we did see some of That but then, like if you were looking at, like, seasonally speaking so to speak it kind of consolidates a little bit uh, to basically, inauguration which would be somewhere around here, the actual, if I could draw a straight line, there we go, inauguration
about the 20th, and here we are today at the 14th, we're not quite there, but let's say it consolidates a little bit to that period of time. So, based upon what this chart had shown me, there might be some additional consolidation to the presidential inauguration now, it doesn't matter which political party gets in, that's what tends to happen to the inauguration, you got the, you got the election itself the actual election results inauguration and you get this consolidation and then after the inauguration you can kind of in many cases you flatten out and you might test higher a lot of times the year of uh the election is a bullish year now anything can
happen all right but i'm just saying hey there might be another week in there of consolidation uh to the downside like we've seen uh we'll see if that unfolds obviously there's nothing 100 in the market but it could be interesting to kind of check out i was looking at this trade pattern earlier today and lo and behold that interesting candle pattern Popped up, which we do get sometimes. In fact, I'm going to do this; I'm going to pull this in over here. I did get a note that I don't know if you can see this – okay, when I'm zooming in, I'll try to be very careful with this, but I was reading one of the comments and I said they were having a hard time.
Let me know if there's an issue with that because I want to correct that; you know, certainly going forward, but uh, interesting pattern kind of coming in down here this is referred to as does anybody know what that is? Well, not this bar just the three; I'm just gonna go ahead and just blow that one out. It's just these three bars right here we kind of have. To go back and look at it again and see if there's something similar over here, it's a little bit different but it's close, anybody recognize that candlestick pattern? Sometimes you will get um this pattern around a bounce and we may see a follow-through. Let me just highlight this right now for you, look over here with me; notice that came in an interesting moving average, that was the 50, the 50 over here, this one was the 100, we got this morning star at the 50-day moving average, that's right up top here, we got the 100 right over here which is in our gold color and we got the same pattern; so just put 100. Okay,
gotcha! Thanks for those comments. I'll keep an eye on those too, but over here this is referred to as a Morning Star pattern. It's this kind of Morning Star-ish, this it generally what it is: you get a move down, and then you test lower, and sometimes it's like a Doji and then you break up higher. Now, earlier in the day, and a lot of times this would actually be, you know what I'm just going to overlay this; it's kind of a red flag. I bring this up because these are these are fascinating potential swing trade early indications that can be early indications you get it down, come down and you test lower, and then you bounce back up.
The Morning Star (MS) well, MS for Morning Star, that's A lot of words to type that out, but Morning Star and uh, the next thing, the confirmation of the Morning Star folks is right over here. I'll use blue; it's when you're going to close above that bar. Can you make a second-day high? Remember we talked about this last week; we're kind of merging candles in a little bit right here, but that's one this is the first close higher this close higher than prior day, that one closed higher and, and you get the confirmation of your Morning Star. This one was just crazy off the 50; I mean it just went nuts! But there could be like an initial entry here and then there could be a confirmation entry, like in another.
Uh, a portion of the entry could come in afterwards with the next follow-through bar possibly if that, if that, if that were to unfold so fascinating; they're both having it happening at different moving averages one just twice as much as the other you got the 50, you got the 100. So, there are some interesting things going on here. But by the way, that scenario I had mentioned to you where you saw a pullback in the uh like from the election after the election, sometimes it's just like a dip and then a consolidation so it doesn't mean it has to drop lower; it could just consolidate sideways very interesting to see if we can break up above here because that could start a lot of our swing trades moving higher that we're going to look at right now.
Okay, actually before we're done, last point: the VIX. I've even got a little label over here look at that; it's like a little loan label. I might as well sit this guy over here where it belongs and I think that is the VIX, that is the volatility index on the S&P 500, and look what that VIX has done it's come off those lows! In fact, I'm going to use this diagonal drawing tool over here to kind of give us a sense of where I'm curious myself: where were we off these low ranges? I'm not going to choose the exact bottom, but we touched There are a few times to where we are now, 46-I mean, that is a big move off the bottom of the VIX.
Now, all out sequel this can be beneficial for us when you get just more volatility in the market for swing trades. Now, of course, that volatility can cut both ways if we're wrong-I mean, prices can drop fast too. But this is just an interesting indication: volatility's up, and that can favor swing trades in general. Now, let's get into our swing trades. We did a swing trade last week that was not really we wanted to get one under our belt; I want to talk about this one, and we did uh hit our exit though on it. And I did mention last week that it wasn't giving Use exactly what we were after, we didn't break above that upper trend line you can see the uh trend up on this, Keysight Technologies.
You see the trend up here is really kind of that flag pattern right there and there is a flag, and lo and behold, we were getting a short term that is a short term higher high and a higher low right there. We came right to that trend line off the top and as you guys remember because I had just barely shown it, boom! Oh, I still got my drawing tools over here, but uh, my gosh! It almost lined up, that's funny. This is our actual chart, but this upper trend line right here, we were just saying, 'Hey, did we break above that Or not, question mark, a trade on anyhow, and guess what, well it didn't work out, but we mentioned it.
Hey, we just went; we wanted to get one trade under our belt, and that was the trade we were looking at, just to say, but we we did make a note: hey, it didn't; it didn't; it didn't break above the trend line. I mean, it broke above very short-term; it didn't close above it, but it went back down, and we got a series of these little dojis over here, and those can be really something you need to be mindful of on the follow-through. The doji itself – I want you guys to imagine this candlestick with me for just a second this is actually an evening star pattern, we Got a, uh, the day up; it's just the opposite of a morning star, and then we got this middle day which tested tired, and then you get the breakdown followed by a breakdown.
Now this is all happening within the potential flag of this entire move so it is still bullish, but short-term it's showing some weakness in these dojis like this, folks; it's kind of like a tug of war. We had a lot of these-I mean they're very close the opening and closing prices. Then you got this one down here; it's like on one side during the day you got the highs, you got the lows; there's a tug of war between the bulls and the bears, and it finishes off flat; it finishes off. Flat and that can mean that the bullish strength that we're getting here is sort of just dying out because the bulls are kind of winning the tug-of-war, they're pushing it down, pushing it down. It did dip lower, in fact, it dipped below the 50.
Now here we are again, we're right back to that level by the way, the exit that I took on this is exactly one we mentioned and that is if it closes or trades one tick below this level. So we got in somewhere very close to this level here and we got out right there, so it was a very, very short um, sort of, you could say risk or a very, very tight exit. And then we've got a little bit of an upgrade here and this one is a very short one and we got done but it's going to be relative to the possibility of an upward move. But I want to let you know I did exit that trade; we're going to look to get into a trade well, let's see what we've got today in terms of what the market's setting up and what could be trades going forward.
But looking over here, what would you guys say right now if we were still looking at this? Is the possibility of a a swing trade entry because these pullbacks can be a little bit longer. You see it? I mean, look at some of these. I mean, this was fairly long before it broke higher. There's kind of a follow-through trade right there. Look at it. Comes right back to where? The initial target we were talking about. Could we see that again over here, which would be up here? What are we looking for? Trend line, the trend line right there. The break above that line, just like our diagram had showed us on our slide deck, getting above there. Notice too, we bounced right off the 100 and the 50.
So just because this one missed out, it didn't actually meet our criteria anyways. Could we still keep eyes on this? Sure. Money flow on this one, really, really quite strong. Okay. Off the bottom. Now, I want to get into the core part of our discussion here, but I've lined this up again because it's only our second week for this class, but let's get into it. Let's get into some current trades. Here is Google or Alphabet. I want to talk about it. And we want to really look at three volume indicators that can lead price action. I'm going to tell you why they might lead price action and why they can be so helpful. So back when I learned about swing trading and bull flags in general, I was lucky enough to also be reading about volume.
And volume is very, very important when you're looking at this. You can see over here with Google itself, look over here with me, You can almost see this longer term cup and handle. I illustrated this actually in a class that I subbed for yesterday, but there is your cup and handle. Now, with that cup and handle, it's broken down into three parts. You've got really a downward trend that begins to flatten out. Then you get the flattening out process, which is referred to as a rounded bottom or a saucer. Hey, whatever you prefer. It's just kind of that rounding process of similar highs, similar lows, even an inverted head and shoulders pattern you might see down here. And then the other side of that cup and handle is right over there, folks.
That is your flag pattern. But there's three kinds of parts to this one. Okay. So we're looking here at Google, very interesting, really quite strong. We took out these highs right here and we're in a consolidation. So what could we see in terms of potential targets first and foremost? This range to this high, that's your flag pattern. There's a pretty good move in there. If this were to extend again, well, it's going to be way, well, it's going to be off my chart. I don't even have numbers above there, but it should be higher, maybe into this range up top. Okay. Whatever that puts us at, we could follow through and that could be very, very interesting for a swing trader on a company like Google here. Now we want to stop.
We want to look at volume. Volume sometimes can lead price action. It can give us a sense, are buyers coming in relative to sellers? What are we seeing? Does that generally set up with the move, the possibility of a move higher? And that is in the direction of the flag pattern, also in the direction of the cup and handle. Some traders really love to see. And then like a lot of these price patterns, we've got a couple in here. You've got the bull flag tied to the candle. And then you've got this longer term trend as well, but we took out those highs. So this does appear to be a little bit tricky. I don't know if you can see this here, but I'm just going to turn it on like this, quite interesting in terms of this consolidation.
Now, you can see maybe some support down through here, but what can volume tell us about this? We talked last week about the potential for breakouts. I want to look at these too, but volume can give us some signs. First off is volume itself. Right down here, look at volume. Generally speaking, what you want to do on that upward move as prices went higher, folks, you're going to want to see volume itself generally be trending up. Now, it doesn't have to be every single day. And an awesome tool here right off the Thinkorswim platform to help us see that is where is the volume relative to average volume? Are we consistently trading above that or more often than not trading above it?
So putting a moving average on volume for when prices are going up, is it holding above the moving average as prices are going up? And that is, is the volume holding? It's holding above the moving average. Click over here. Let's put it up right now. I'm just going to choose the 30-day. I've seen traders use whatever. They've used the 50 or the 30 are generally the most common. Now, look over here with me. As I click on this, I can go over here and I can say, you know, I clicked on the little wheel. So what I'm going to do now is I'm going to go into the volume. It's going to be moving average on volume. I do have some Think Scripts that I discussed on Friday about ways to put volume.
We put volume on the RSI. We put volume on the RSI. We put volume on the MACD. Another sort of, I should say, a moving average on RSI, a moving average on MACD and others. MACD kind of has its own moving average. We've added more. But this enables you to do it just really quickly on volume. Let's go 30. We'll use cyan. That's fine. You should see that on a black background really nicely. Let's click OK. And there you go. Let's pull it up. Are you able to make some progress above that? Now, generally speaking, are we moving? There we go. OK. When prices begin to break up on the pull of the flag, how are we doing here? Well, you can see quite a bit of activity as a reference point.
Now, I want you guys to do two things. Is the volume itself going up? Can you literally see it going up? Do that better. Like right here. Can you see it up? At the same time, can you see prices exceeding that 30 DMA on volume? It's a good little reference. It'll get your eyes clued in on it. And the more you look at that, it can also be a confirmation. But you can also kind of see patterns behind there. OK. Look at this. Price is going down right here. I'm going to try to line this up the best I can. But look what happens with the volume down here. Oh, I went off a little bit to the right. But you can see big drop. We're clearly below that line.
We're clearly below that line. We're clearly below that line. We're clearly below that level. OK. We didn't even get above it. So still in this consolidation, we're holding below there. Now, big picture, what is this telling us? This is really kind of the key point with our first indicator, which is honestly volume itself. Because the other indicators are just going to be taking volume. It's kind of like looking at price and looking at other indicators like the RSI off of price. I've got other indicators from volume, but this is the core function volume itself. I'm going to just put it in here. Yes, we were higher volume for more buyers coming in. And this could be institutions that when they get in, they can sometimes take more shares. They buy and hold.
They might hold for longer periods of time. I mean, we did break above a resistance level. There could have been a lot of buying pressure in there. And over here, a minus. It was a positive to the upside. It was a minus to the downside. As I thought, and kind of contemplated about how I wanted to tell you guys that this week; I think that might just be the easiest way. Were we generally higher on that side and generally lower when it became time to sell? The normal ebbs and flows of the market? Check it out. We just kind of went flat. We went sideways in price, and volume really died off. So the sellers, there wasn't a lot of volume there. That's all that's equal can be a positive. Okay.
So that's just volume. Alright. I think you guys are pretty clear with volume. Any questions? Do you guys follow volume? I'd be curious to know how you do that, it's like Cam's got all of our questions. Thank you, Cam. Excellent. Again, as Cam mentioned, too, definitely give us a follow on X if you are interested. We do post a lot of content in there around the market, et cetera. Cameron MayCS; MikeFairbournCS. Love to have you guys on board. Also, while we're at it, bottom right-hand corner of the screen, just hit that subscribe button. So easy to do. We'd love to have you part of our Trader Talks channel. Over 135,000 subscribers currently. If you liked today's presentation, smash that like button. I'd really appreciate it.
Let's me know that you guys find this informative and helpful. Okay. Let's continue on. I'm not seeing any questions come through. I guess you all got it down. Awesome. Well, that's what I want to see. I like that. It's a positive thing. Now we're going to look at money flow right now. But by the way, so as I mentioned, this can lead price action in this sense. We're looking at volume. How can volume lead price action? Well, you had a lot of buyers coming in here, folks. The plus, and when it came time to sell over through here, we just didn't get nearly the amount of volume on the sell side. So just fewer sellers getting out. Does that kind of set up for what we'd see?
Now, what we wouldn't want to see is when prices come down here, we're getting these big spikes in volume. Maybe some of the bigger hands are just saying, 'I kind of like my profits here. I'm gone.' So it can be a leading indicator. Volume can. We're looking behind it. Now, the money flow indicator, you guys might have known that I do use this, but I think it'd be extremely interesting and informative around swing trades. Honestly, it's tied into bull flags to a large degree because you're looking at that big move up and the move down. And what it simply does is it nets out buyers versus sellers, what it tries to do. There's no perfect indicator out there, but let me explain to you how it works.
If you close down on the day, it takes all that volume, and that was big volume. It takes all that volume, and that was big volume. It takes all that volume that day, and it subtracts it. And look at the money flow. Does it dip? In my mind, folks, that's an absolute dip. That is a drop right there. And that's a big drop because it was big volume. It subtracts it from the money flow. This is not an oscillator. This is a cumulative and distributive indicator. It's just simply, it can add it. It can subtract it. If you close up on the day, it makes sense that you had more buyers than sellers. If you close down on the day, we had more what? More sellers than buyers.
Now, I'm going to stop for a second. What do you see over here? What does that money flow tell us? One of the main points is, is the money flow moving up with the trend? Is it moving higher? That might be one of the key points. Are we getting higher highs and higher lows in the money flow? As a matter of fact, we are. We are getting higher highs and higher lows in the money flow. And that's really a central point of our discussion here, is we're starting to break up and move higher. Now, the thing is, is this can lead price action as well. And as I was looking back, and we'll track some of these moves, let me take this back.
Now, this is a very, very large flag pattern and a potential pull and a pullback, right? It could be a bigger run up too. Let me draw your attention to a shorter term one that we'll look at from time to time. And I'm going to explain to you kind of the possibility of a leading indicator. Look over here with me. You see that flag pull come up right there? Look at this. See, it comes up here. Okay. Look at the money flow. Volume was, eh, it was okay. It wasn't great, but what was interesting about it, it's another read on money flow. Folks, it was all cumulative. We had close after close after close. So, it adds that volume together because collectively, we're not just looking at a single day here.
We're looking at it over the whole of the flag. Take a look at it. Wow. Wow. It broke up. I mean, that's a substantial move higher, but it can have an early warning sign. And when I say warning, it's warning for the possibility of a breakout. Now you might say warning. I want a warning. If it's going to break out earlier, let me show it to you right here. I'm going to zoom in on it and highlight. Oh, it's too much. It gets hard to read if I zoom in too much, but right here, this is plenty. Okay. So watch this. Look at this closely. Look at this. Okay. So here's the move up and we ran up higher. Money flow, man, it was positive. There's a lot of the cumulative volume.
Really, actually, well, in this entire range right there. When we pulled back, man, it was hardly anything. It was just so mild. We went flat. And then I've got to grab a thinker's swim tool. You can get that right over here in the bottom right-hand corner. You've got to choose one that will give you a box to open up the box. You can measure time and percentages, et cetera. Just go to the trend line right there. Now, draw this trend line off a couple of areas. Look at price. Did we close above that level? We did on that bar right there. We did right there. But if I take that same line and draw it down below right here, uh-oh, we broke higher. Do you see what that could be telling us?
It's an early indication. You know, saying, hey, Mike, or, you know, folks, there's positive indications of buying here. In fact, we broke out right there. We broke higher. And what money flow tells you is if you break higher on money flow, but you, look where that happened. This is so interesting. This volume is just so different from price. Look at this. Okay, I'm going to draw this straight up. I've got to really concentrate because that, okay, there we go. It happened literally right there at that bottom. And that tells you, if you break out in money flow, according to money flow, it tells you that money flow says, well, that means you're going to take out this high. Even though we were down here, it says you're going to take out, you're going to break above this level.
You're going to break higher according to money flow. It's an early warning sign or early indication, we could say, sign. Look at this. So move up here. It's telling you right there that this swing is going to break higher. It's going to break higher. It's going to trade. Should actually break higher. And it says break higher. And look what it keeps doing. Man, it just, boom, boom, boom, keeps climbing. Even before we broke out, look how high we are. It's a positive divergence is what that's referred to as. And that can also be a really strong indication because you're getting buying activity, buying, buying, buying, buying activity coming in. And boom, we took off, broke out of the top. And notice what we did do.
I'll flip back to, I'll just take this off so you can see. But did our extension get met on this right there? Off that bottom, T1 easily, but then also T2 right there. Clearly we broke it. It actually ran up even higher than that. That is an early indication system. Okay. Keep that in mind. Another way volume can lead price. So let's revert. Let's go to the current. Let's see what we've got. Boom. What are we looking for over here? If volume were to suddenly break higher over here, this is still consolidating because we might get that consolidation during the inauguration time right before inauguration. We might still go sideways possibly. Let's just say that happens, but we see this going up and breaking out further indication that we might be just right around the corner with a breakout due to money flow.
That's the way traders can use money flow. Okay, all right. Last one. And this is one that's really kind of unique to our platform. I know there, I think there's one other platform out there that does have it, but there are not too many. And that is volume profile, simply taking volume and showing us where the volume came in at, as opposed to the day-to-day timeframe. Okay. Now a quick note on this and how this could be helpful too, is we had a lot of volume come in here. We had a lot of volume. These are the nodes. In fact, that is the point of control. That is the highest volume we had over the last one year. It came in right at the top of the volume.
So we had a lot of volume come in here. It came in right at that level. Interesting, isn't it? That's where the majority of buyers came in. You actually had a moderate spike right here, but it can tell us something really fascinating. And that's this: if, in fact, we do go up a little bit higher, see how that volume tells off right there. It says this, that if we do get a close above the high of the low day, we get a K hold. We don't have one now, but if we did, if we do get a second candle higher to confirm, it's a very, very interesting positive. And the reason is, is this volume profile shows us we did not have a lot of volume here.
And that volume can act as a form. If you are below it and we are below it, it can act as a form of resistance, but notice how it's diminishing lower. If we were running up to a big volume profile, folks like right over here, if there was another big spike right there, big spike, like right at these highs where there could be, we would say, wow, we're coming up to resistance, right? If the volume profile, fill that in real quick. But if we were to run up here, that could be a real problem because there's resistance. We're running into resistance. This says we don't have resistance. We don't have it. There is no resistance above this level. So, prices could move very quickly. And what does that mean for us?
Let's go ahead and draw the extension. Here it is right there. The extension higher could unfold. In other words, traders, could be using that as a guide and that would be constructed. Those that are using the volume profile, this is a really standard way of using it. That could be construed as a positive as well. So we've got a number of different markers here, folks, three of them in volume that we're taking a look at here. Now I've got a lot of things to look at here. I wanted to throw them out right now and they do take a little bit of time because we wanted to go through all three of them. But what I want to do right now, I'll take this off for now.
I encourage you to take a look at the volume profile, but I want to go through a few of these that I was looking at. Now here is one that was interesting today. So let's just do this in the last five minutes, I'm gonna go through some of these trades. This is another cup and handle pattern. I'm going to take off those moving averages for now that I've seen over here. Let's just knock those off. So we can see the price real clear. Oh, anyways. Real clear. One more. Boom. Okay, another one that has a longer-term potential cup-and-handle pattern. These are not very common. I'll do my best to show you guys these each and every week in these scenarios here. But that could be a longer-term flag pattern, don't you see it pulling back here?
Look what I've drawn off the top-the trend line. We went above that trend line today and I was really, really hoping we'd close above it so we could put on an example trade, but hey, I'd rather just have it do uh show us exactly what's going on behind the scenes with it, and right now it's not doing too much. I want to show you-volume has been incredibly weak down here on this pullback; we've had very, very few sellers relative to the buying pressure coming in, and the money flow has done a great job of pointing this out. Look at this-this is a substantial drop actually in price, I mean, you know, relatively speaking, we were up close to 190, this almost came down to you know, you know, one mid-150s.
Look at money flow, my gosh-it's just it's almost just a sideways line; it's so close. Look what money flow has been doing as of late-it's been going up. Now if we start to take out that high right there, folks, if we take out that high, do we have an early warning indication? Are you looking at it? We're going to be looking At it in this class because again volume indicators can lead price action; they're known as leading type indicators. This is one we've got eyes on, we don't really have that indication but if we look at the price action, we're really looking at it as a tree right now. I'm going to wait for it. Now, if I get one tomorrow, I'm going to put it on for our class, but I just want to show you kind of what's going on behind the scenes.
Now, a few others, and we're going to wrap this up, but here's DRI, Darden Restaurants. Not to be confused with that old punk rock band, DRI. That's right in my era. Wow. Hadn't thought about that in a long time, but there you go. This is Darden Restaurants, I'd say incorporated probably. And do you see something similar? Higher highs, higher lows, pull back 180. Oh, did we have a second day close, which I was looking for here? A second day close higher. We're getting dang close, but we did see a, you know, we didn't get a hold close above the high to low day because this was the low day yesterday. And if we close above here, it could, but we're getting very, very close to maybe a couple points here for the possibility of an entry.
Look at that trend line. Gosh, we're right at it again. This volatility in the market's pushed us down, but I still want to go through ahead and look at a few of these. Here's another one, ANET. Okay. Very short term. You can kind of see the morning star, the red down, middle, up. You got it. ANET's in there. AVGO. Gosh, very, very similar. It's kind of like a massive, not really a cup and handle because it's so high up, but it was another earnings report that got us down to this. Strange. I've been waiting patiently. And by the way, we're going to put on some paper. I'm going to enter it for our class when we do get either a couple day close up or a break above some of these coming in here.
That money flow, my gosh, so strong. Powerful volume on the upside, folks. Really, really mild to the downside. Remember what I mentioned to you? Check that VP over here, that volume profile. We kind of ran out of time today on all of these, but I wanted to get three of them in there so you guys can take a look at it. I've got just two more to go. And I wanted to give you just some of these to look at. If you ever were looking at any potential paper trades, it could be fun to take a look at and see what occurs with some of the rules we discussed. Really solid money flow over here. In fact, this money flow right here, notice it says it broke above these highs right here.
You see these highs? So, according to money flow, this move should take out this high range right here because, right here, we're going to have a lot of money flow. We're going to have a lot of money flow. Again, we'll go through this each and every week till you guys really get it down. But see that break right there? Comes at a funny spot. But it says, according to money flow, that we could break out higher here. And we'll see what happens. Now, no indicator is 100%, but this is how it can be utilized. Last one, and we will wrap it up. Here's one that just broke just on Friday higher. Notice we broke higher. This is Constellation Energy. We're holding right at that level right there.
And this could be another one to kind of look at. Now, I'm just kind of wondering, you know, in this class, will we take trades? I was going to try to take the trades, you know, as they were happening during the week. Hopefully, they happen during our class. But this is a group of those that I'm looking at. So we can put paper trades and add them and follow them going forward. And we'll talk about the exits if those come up as well, folks. But I hope you found this informative and useful. Today, all about just trying to get a better understanding of, hey, maybe, you know, what are the expectations? Are there more possibilities, more potential for prices to break out when volume indicates it? That's what a lot of traders will look at. They like that leading indicator. So we went through three of those today: we started with volume itself, money flow, the cumulative indicator, and we finished off with the volume profile. So look forward to future classes, folks. Thanks so much for the questions, comments, coming through. Thank you, Cam, for your help in the chat. Folks, we'll leave it there. Fantastic rest of the day. Look forward to next week's discussion.
