Think script: http://tos.mx/AfFRqHi
Formula below is used to predict the Total Volume Traded for the day & Float Rotation: Volume Forecasting (VF) = PM Volume x 10
Volume Forecasting (VF) = 1hr Volume x 4
Float Rotation Prediction (FRP) = VF/Float
Volume Forecasting is best used in micro/low float stocks
Volume Prediction (VF):
Using the VF, signals if the stock has the ability to move up and if it is safe for shorting. For example, if the VF at 4 pm is expected to be 100m, however by 11.30 am it is close to 80m this would mean that by 4 pm it will definitely trade >100m and there's a lot of demand for stock & it might squeeze. However, if the total volume traded is expected to not exceed VF in the morning, this would mean that demand is lesser and squeeze potential is low. Price action is still important in any circumstances, meaning even if the stock has a lot of volumes traded if it does not create Higher Highs & Higher Lows or present numerous traps for short-sellers, it is likely not to squeeze.
Squeezes usually happen when Total Volume Traded beats the VF by a huge margin. Faders usually happen when Total Volume Traded is not expected to beat VF. This indicates weak demand and can’t overcome supply.
Volume Resistance (VR)
From the daily chart, find the highest volume traded and that will be the volume resistance needed to break into new highs. - Using the VF, you can forecast the likelihood of breaking the VR to determine if price is able to break that previous high
For example, NURO of 3.09M Float has a VR of 67.5M on 08/12/20, and 20/07/21 traded 282M vol., the stock broke new highs & squeezed as it overwhelmed VR & had a float rotation of 91 times.
One must also account for Float Rotation (FR).
For instance, when there is a VR e.g. 30m on 2m Float and the float had massive float rotation e.g. 20m Volume: 10x Rotation, it will break the resistance, in this scenario, it will only reject the resistance volume on non-micro float stocks.
This is why on the backside trade of parabolic runners, they are not able to break the previous high as they are unable to overcome the initial VR.
NURO 430M VR vs 96M Volume
Scenarios of Volume Forecasting:
1) Volume Prediction is overwhelming Volume Resistance: Risky Short
2) Volume Prediction is close to the Volume Resistance: Potential Short
3) Volume Prediction is under the Volume Resistance: Short
Float Rotation (FR) & Float Rotation Prediction (FRP):
Good Float Rotation/1st Green Day: 3-5x
Crowded FR/Afternoon Action (Squeeze): 10-15x
Untradable: More than 20x (Do not short if it is on the parabolic run unless it is trading in a consolidation zone)
Using FRP allows you to forecast the EOD FR
Lastly which volume prediction formula should you use?
If Stock has news and PM has a lot of volume traded and action use PMV x 10
If PM has no volume traded and little action (micro gaps) use 1st HR Vol x 4
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