The last two trading days (9th Feb & 10th Feb) of Nifty Futures buyers provided a significant volume commitment. So what is so important about the volume commitment from the buyers and where have the volume commitment happened?
What is a Volume Commitment?
Volume commitment is a trade location where more aggressive participants enter or strong absorption happens which brings the trend to comes to an end.
How to use Volume Commitments?
One can consider using Orderflows to measure big deltas and cumulative delta gives a clear idea about the overall commitment for the day.
Smart Money Commitment
Volume commitment happens with smart money and very often comes at an extreme impulsive phase when huge panic is observed in the markets. Interestingly most of the smart money happens when the markets are bottoming out / intermediate bottoms.
Momentum Traders Commitment
At times momentum, traders do big positioning by creating aggressive price action and in certain cases, big speculators create aggressive positioning with strong volumes however the commitment is not guaranteed and such kind of trade location where the price going against the positioning zones usually leads to larger liquidations aka waterfall effect!
Nifty Futures Volumes Commitment Zones
The last two trading days (9th Feb & 10th Feb) of Nifty Futures buyers provided a significant volume commitment around the zones 17330 – 17430 levels and 17491 – 17602. If Price breaking such levels in a very short term could indicate the more liquidation odds in a very short term with a kind of waterfall effect.
Waterfall effect post breaking buyer commitment – updated on Feb 15th, 2022
If you are a price action trader you know how important the volume commitment plays a major role in tracking the market context via volume. Volume commitment is one among them.