Volume Analysis
Volume is the fuel that drives price movement. Learn to read it.
Why Volume Matters
Volume represents the total number of shares traded. It confirms the strength of price movements and reveals the conviction behind market moves.
>Golden Rule
"Price + Volume = Truth"
Volume + Price Interpretation
Price Up + Volume Up
Strong buying interest confirms uptrend
Price Up + Volume Down
Weak rally, possible reversal ahead
Price Down + Volume Up
Strong selling pressure confirms downtrend
Price Down + Volume Down
Weak decline, possible reversal ahead
Volume Patterns
High Volume Breakout
Price breaks resistance with strong volume
High Volume Breakdown
Price breaks support with strong volume
Volume Dry-Up
Low volume indicates consolidation
Climax Volume
Extremely high volume often marks tops/bottoms
Volume Indicators
On-Balance Volume
Cumulative volume flow indicator
Volume Weighted Avg Price
Average price weighted by volume
Volume Moving Average
Identifies above/below average volume
Volume Trading Tips
- • Always confirm breakouts with volume
- • Compare volume to 20-day average
- • Volume spikes often mark reversals
Common Mistakes
- • Ignoring volume during breakouts
- • Not comparing to historical averages
- • Using volume alone without price context
>Volume Wisdom
"Price tells you what, volume tells you why."