One of the filters vpa traders can use is to consider unusual volume to see whether it is in line with the price action and the principles of volume price analysis, and one great example is MLNX a semiconductor stock that is now approaching it’s all-time high and it will be interesting to see over the next few weeks is whether this is taken out.
The characteristic of the stock could best be described as Jekyll and Hyde with explosive phases of volatile price action followed by extended periods of congestion as we can see on the monthly chart. The period of price action from 2012/2013 was classic and similar to many stocks during the dot com boom, and indeed more recently for cryptocurrencies. The congestion phase that followed has been in place since July 2013 through to late 2017 before the second phase of explosive price action which is now in place.
The trigger for the current bullish run was the initial break away from the volume point of control at $42 which saw the stock rise to $90 before a further injection of volume in January this year propelled the price towards the all-time high of $120.05. This is now the key level for MLNX but given today’s extreme price action expect to see consolidation before any sustained attempt to move higher in the medium term.