Choosing where to enter and exit trades is a skill that can be learned through observation and practice. At the end of every day, get in the habit of marking where the high and low were made. Then look back to the last time that price traded. If you do this on a regular basis, you will find that highs and lows tend to be made when old high-volume prices and very low volume prices are retested. Recognizing where sellers gained control of momentum before a decline and where buyers gained control before a rally will help you pinpoint entry and exit levels. I prefer to use 30-minute bar charts for reading day momentum and marking low and high-volume or fair prices.

Momentum ends and begins at high volume prices. In the 10y note future chart below, high-volume prices are marked with red lines using time at price. The more time spent at a price, the more value it has (Price + Time = Value). Conversely, very little time is spent at low volume levels. When momentum kicks in, low volume prices are left behind.  When those low volume prices are retested, reversals often occur.

Another way to track high and low volume prices is by using bell curves. The gold chart shows weekly bell curves or profiles. High volume prices are those that stick out furthest to the right in each profile. Note how often the high or very low volume price provided support or resistance when retested.

To become more adept at picking extremes, all it takes is a little history and homework.

John Seguin, Market Taker Mentoring