Active trading and volume analysisThere are two biggest volumes that are at the very bottom of the movement and that push the price up, there is such a thing, the trend will continue until these volumes are interrupted by larger volumes, while they must be at the top of the trend...
- Rising volume indicates the determination of sellers and buyers to push the price down or up, respectively. For example, if in an uptrend volume rises on a price move higher, this indicates that buyers are very willing to buy and the upward movement will continue.
- A trend can continue for a long time and on decreasing volumes, but usually decreasing volume during a trending price movement indicates a weakening of the trend. For example, if the trend is up, but the volume is steadily decreasing, this indicates that fewer people are willing to buy and push the price up. However, this trend will not change until the sales volumes exceed the buying volumes.
- Ideally, the volume should be more when the price moves in the direction of the trend, and less when it goes against the trend (on pullbacks). This shows that the movement in the direction of the trend is strong and the pullbacks are weak, and the trend is likely to continue.
- High volume accompanied by sharp price movements against the trend is a sign of a weakening trend and / or a possible reversal (in accordance with the previous paragraph).
- An extremely large spike in volume, 5-10 or more times the normal average volume (in a given time frame), may indicate the end of a trend. This is called an exhaustion move because usually when so many stocks change hands there is no one left who is willing to push the price in the direction of the trend and the price reverses (often quickly).
