AMZN great example of relative down volume:
This is from a chart I had saved back on March 8th. I didn't publish it, but I felt it was worth publishing now anyway just to show how I had analyzed the moves down and how investors were absorbing shares being sold and how it shows up in the chart. What a technical trader needs to look for is the amount of in successive moves in the same direction. You can see in the chart that each decline in price occurred on less and less and that suggested that the sellers were done selling their shares, which of course sets up for the next big advance.
The way I am placing is different from other textbooks, but these are some discoveries that I have put to use after nearly 30 years of charting stocks. Even though there are only 4 price data points each day, coupling that with the 5th variable of and then the 6th variable of relative action to the market, there are still many ways to analyze whether price action indicates accumulation or distribution. There is no right or wrong way, but only ways which yield variable-risk, variable-reward and variable-probability of success. At the end of the day, it helps to believe what the chart pattern is telling you so that you can take action to enter the market and more importantly to take action to EXIT the market at a loss.
Here's wishing you all success and finding the next chart similar to this one!
Cheers, Tim 2:10PM EST Mar 27, 2012