If you learn how to read Speed Index you will understand the market better and forecast better their next move, because there is only one successful strategy: "THE FOLLOW" strategy.
What is "THE FOLLOW" strategy? Simple, "Let them do what they must to do and then follow!"
Let's read the Speed Index story on the chart below.
Our reference is the Average SI the left corner of the chart AvgWSI: 18.9, anything close to +/- 30% is considered a Normal Speed Index. What does a Normal Speed Index mean? It means that the market agrees with the move. Anything more or less should be considered an Abnormal Speed Index.
We have hit a Resistance Level with a Normal SI of 17.7, market agrees
The immediate down wave with a Normal SI of 17.0 . market agrees with the down move. We found sellers after hitting Resistance.
The next up wave has an Abnormal Speed Index 49.2, which means that something is cooking. Probably price has a hard time to move up.
The next down wave with 15.9 SI notes that the market agrees with the down move. This SI it's on the low side because of the previous 49.2 and confirms the previous hard time to move up.
Next up wave with SI 23.9 is on the high side. All above denotes that the market agrees with down moves and has hard a time with the up moves
Next down move with a Normal SI of 17.7, market agrees with the move
Fast up move with a Low SI 9.8 during US news , that's also an Abnormal SI (Low). This is where you should ask your self where did this come from ? is it justified ? did we have any previous pressure building with High SIs? The answer is "No" , therefore this is a Fake Move , excellent opportunity to enter Short if you were not already from the previous Abnormal SI break.
The rest is History and money in pocket!
I hope this helps.
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