Follow the Yellow Brick Road
Updated
Volume Flow seems to diverge from price when the market is oversold. In other words, the yellow lines dictate when the hype cycle fueled by harmful investors emerges (a secondary, greed-fueled cycle, as opposed to a momentum-fueled run), and the selloffs from disciplined market makers begins. Don't be like the traders in the chart that kept buying for a year after the divergence, unless you plan to hold long-term (5-10 years).
When the signal trend drops below ~-2.5, the price only recovers when the signal confirms to 0 as the price increases. (ie, no more divergence, we get a new cycle)
When the signal trend drops below ~-2.5, the price only recovers when the signal confirms to 0 as the price increases. (ie, no more divergence, we get a new cycle)
Note
Let me know if you like the idea. Hard to set decent targets because it's a parabolic trend. I think 2250-2500 is very much possible, maybe ~90% chance, but as we go lower (1750-2250) we have to respect the parabolic trend, I'd give it maybe only a ~20-40% chance, depending on how many banks fail again this bear market.
If you notice, each time there's a bear market (red arrows), the price usually won't touch the previous green arrow, with the exception of:
1989-1990
2006-2008
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