Volume Indicators Reveal Accumulation Patterns
Relational Technical Analysis embodies more Technical Analysis and often Fundamental Analysis to derive a clearer understanding of the behavior of price.
A Platform Candlestick Formation is a very specific type of sideways price action, which only forms when Buy Side Institutions using Dark Pools are accumulating a stock. It forms due to the type of orders these giant lot investors use. They use a bracketed order type available on Dark Pool venues, and thus price can be controlled in a precise manner.
The Platform is typically 10-12% in width or magnitude. The runs within the Platform are too small and brief for good Swing Trading, however oftentimes less informed Retail Traders will try to Swing Trade these intrarange runs with results of whipsaw action.
The Dark Pool bracketed orders are automated, but they are not High Frequency Trading Firm orders. The sideways action in itself, will not reveal whether this is Accumulation or Rotation by the giant Buy Side Institutions. Indicators other than those that use just Price and Time are required for Relational Technical Analysis of a Platform Candlestick Formation.
Relational Technical Analysis is needed in order to determine if this is Accumulation which is the buying of stock slowly over many weeks to months, or Rotation which is the selling of stock slowly over many weeks to months.
This is to lower inventory of a long-term held stock. “Distribution” is the term used for the sudden selling of shares by Institutions, to meet redemption demands. See candlestick chart example below.
Martha Stokes CMT
TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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