Jump to content

Understanding price movements


Recommended Posts

Guest RedSwift

Hello,

On the 20th of February, a firm released its 2018 full year results and the price surged 10%. I understood that this would typically be a result of investors seeing the positive results released, and demand for the share driving the price up, however, the screen shot below shows the trading volume as being similar to the days prior to and after the release. So if the trading volume is staying the same, what is driving the price up? 

image.png.ae5f30ae6f194e3ba9f8c25269de9919.png

Link to comment

Hi @RedSwift,  Supply and demand are not the only drivers of price, in this case the simple answer is a change in perceived value.

There is agreement between buyers and sellers that the shares are now worth more than they were before the news release.

Neither supply and demand imbalance nor a change in perceived value will automatically cause an increase in volume of shares traded. In the case of S&D there is the implied initial lack of trading opportunity to do so which is why change in volume is often delayed. In the case of perceived value change the new status quo will not necessarily encourage new additional buyers and sellers to enter the market. 

 

Link to comment
Guest RedSwift

Ok thank you. I'm probably being obtuse here, sorry! But how do buyers/sellers signal what price they are willing to buy and sell at if not through their actions on the market?

Link to comment
8 hours ago, RedSwift said:

Ok thank you. I'm probably being obtuse here, sorry! But how do buyers/sellers signal what price they are willing to buy and sell at if not through their actions on the market?

Good question, a chart is showing you footprints, where market movers have been and where they are headed. For a clue as to where they might next be willing to buy and sell you would instead look at the orderbook. This is why I stick to support and resistance, if you look at the orderbook you will note orders are clustered around significant levels, boundaries that have in the past been zones of contention. Support or resistance does not mean price can go no further, just that it likely to be challenged. Orders cluster because weight of numbers has a better chance of turning a market than buyers or sellers being spaced apart.

As a retail trader don't get involved in the actual battles, don't buy into resistance, don't sell into support. Wait for a winner to emerge and follow. 

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,295
    • Total Posts
      90,940
    • Total Members
      41,422
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Chester
    Joined 08/02/23 06:56
  • Posts

    • For more up to date news on how markets will open, the latest earnings and economic news, watch IGTV live in the platform at 07:30am UK. Today’s coverage: Indices: European mkts expected up. FTSE100 24hr mkts another new record high FX: Little move despite Powell saying more US rate rises needed to combat inflation Equities: Earnings this morning - BDEV PZ SVT TTE.  VOW last night a disappointment. This evening - UBER DIS. ZOOM announces 15% cut in global workforce Commods: Gold up for third day.  Oil up after API drop in inventories. NY orange juice another new record high        
    • Elliott Wave Analysis TradingLounge Daily Chart, 8 February 23,   Uniswap / U.S.dollar(UNIUSD) UNIUSD Elliott Wave Technical Analysis Function: Follow trend     Mode: Motive Structure: Impulse Position: Wave III Direction Next higher Degrees: wave III of Motive Details: Wave 3 rise is likely towards the level of 15.37 Wave Cancel invalid Level: 4.946 Uniswap / U.S.dollar(UNIUSD)Trading Strategy: Uniswap is likely to recover well as price breaks through the MA50 and MA200 are bullish signals. and leads to the movement of wave III that is usually equal to 1.618 x the length of wave I at the level of 15.371. Uniswap / U.S.dollar(UNIUSD) Technical Indicators: The price is above the MA200 indicating an uptrend. The wave oscillators above Zero-Line momentum are bullish. TradingLounge Analyst: Kittiampon Somboonsod     Elliott Wave Analysis TradingLounge 4H Chart, 8 February 23,   Uniswap / U.S.dollar(UNIUSD) UNIUSD Elliott Wave Technical Analysis Function: Counter trend     Mode: Corrective Structure: Flat Position: Wave (B) Direction Next higher Degrees: wave ((2)) of Motive Wave Cancel invalid Level: 4.95 Details: Pullback of wave (B) when end, the price decline to wave (C)again. Uniswap / U.S.dollar(UNIUSD)Trading Strategy: Uniswap There is a strong recovery trend when the price breaks MA50 and MA200 is a good sign. But nevertheless, the price is in a phase of retracement in wave (2), when it finishes, the price resumes upward trend. Wait for wave ((2)) to complete. Uniswap / U.S.dollar(UNIUSD)Technical Indicators: The price is above the MA200, indicating an uptrend. The wave oscillators below Zero-Line Bearish momentum.
    • may I ask if anyone knows where is a good place where there is a forum on Excel Based Trading?
×
×
  • Create New...