Next, let’s take a look at Coca Cola which I wrote about back in December when it was struggling to break away from the volume point of control in the $53 per share area and lacking any momentum, so one where patience was required. Following an explosive start to the year the candle of the 7th January is now key. First, we had the sharp move lower on the 4th, 5th, and 6th of January with heavy selling evident. But then comes the ultra-high volume on a gap with the stock closing with a narrow spread candle and wick to the lower body, sending a clear signal of buying by the market makers which was promptly followed by an up day last Friday. The stopping volume of the 7th January brought the down move to an abrupt halt, but we can expect to see more of the ‘mopping up’ of further selling before any meaningful recovery begins. In other words, we can expect a short period of congestion with further buying before the stock recovers its composure and returns to test the volume point of control at $53 per share.
Note also the depth of volume on the VPOC histogram which is now acting as support in the current region around the $50 per share area and so providing a platform of recovery for this stock on the daily chart.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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