I’ve uploaded two charts that demonstrate a new strategy I’ve been using recently. The lower study on both charts is called a “tape momentum” study. It detects fast changes in the pace of the tape. The green bars are “extreme” spikes. When you get these extreme spikes it indicates an algo, HFT, or large institution is executing a huge order, and the pace of the tape is above average. When you get spikes around 600 or more, often they can indicate tops or bottoms.
Notice in chart 1 from today, a reading of over 1000 indicated the exact bottom of 1349.25. In chart 2, on July 19th a tape momo reading of 582 indicated the exact top of 1376.
A few notes about this study. It doesn’t work in first 20 minutes or last 20 minutes of the day. That is usually the heaviest volume and you get huge tape momo readings as a result. Also, as with any indicator, it should be used in conjunction with pivots, macro news, and other indicators. During RTH, you should have the tape momo study on a 1600tick chart. During Globex I like 512tick. Basically, the lower the volume, the shorter the timeframe. The study is most accurate after big move. If you get a green spikes in choppy, range-bound price action, they are much less accurate. Finally, pay attention to how big the spikes have been recently when assessing whether a spike indicates a reversal or not. Notice a 582 got us a reverse on July 19th, but it took over 1k today.
If you use TOS, and would like the code for this study hit me up @freemrktcptlst