How to read this VOLUME chart ?

ElectricSavant said:
I believe it is what happens to the price WHILE volume is building.
More...
in one word...yes
in two words yes yes

watch it live.....but it does confirm price more often than not...
and as the trend matures, it does not take a genius to say that the trend will weaken...but it will continue....as long as the countertrend players keep getting killed/sacrified at the altar of the trend:so the trend ends when the volume of counter trend players is low, NOT HIGH.
or to put it another way the trend will end when there are ONLY WITH TREND TRADERS.
THE TREND YOUR FRIEND?
 
Last edited:
padutrader said:
volume has it's place in the analysis but very often the volume signal is over ruled by momentum especially when the trend is strong and like everything else in technical analysis has to be put in context.
do not forget volume like momentum or trendlines is relative and low volume may get even lower ......so what is low and high is very subjective.

often volume will signal weakness which will turn out to be temporary.....so taking ANY SELL SIGNAL including that of volume in a strong trend should not be done if the context is not right
declining volume is as sign of weakness but as any trader knows the market can get weaker and weaker and still continue trending.

but used correctly it does provide an edge
More...


First you speak of momentum. Momentum of what? Price? It must be price you are talking about since you then say momentum "over rules" volume. Clearly, in YOUR mind, in YOUR usage, price and volume are not linked. Maybe rethink. It is easy to prove that price movement, a.k.a. range, increases with increasing volume. In that way price and volume are linked. Volume is NOT subjective. If there is no volume, there is no liquidity for the instrument. Shit on the shelf for $100 an ounce or a penny per gram doesn't matter... no volume, no liquidity. Volume has no use in those situations. Not to be confused with decreasing volume. Volume is a measure of liquidity. Volume is not the liquidity, it is an outcome of liquidity. You've highlighted a typical volume dry up on your chart... increasing volume--> declining volume (in context, arrow looks to be lowest volume of day, or very close to it)--> increasing volume.

It also seems to me part of YOUR volume usage is about "picking" volume tops and bottoms. Volume peaks and troughs are dependent on where you are within a trend (a trend has a start, a middle, and an end). Volume peaks and troughs are different during a retrace versus a continuation of trend. In this regard, yes, you need to know the context. Gold star for you.
 
You must log in or register to reply here.
Back
Top