Good day, All!
Originally, I just wanted to publish another trading idea:
But the more I was looking at the chart, the more it looked like a good example of volume analysis technique.
Basically, the concept is pretty simple - when the price is testing strong supply/demand zones, support/resistance levels, trend lines/etc, significant volume spikes are always accompanying these attempts and further price moves.
Such an impulse is usually enough for the price to travel certain distance, but is loosing its momentum over time.
In order to keep it moving, the price should be supported by further regular medium or higher than that volume spikes.
If the momentum is lost, the market is entering the flat period.
At the same time, the stopping volume at important key points is usually quite higher than the volume which is just enough to keep the price going in already established trend. Really high volume is a great way to detect that something interesting is going on and that this MAY (but NOT necessarily!) be an indication of a turning point.
I would like to underline that sudden volume dynamics change should not be used directly to predict the future trend, but rather should be used to check if the price really keeps its previous direction or it signifies the increased probability of the reversal.
Volume changes at certain levels are initiating, supporting and stopping the waves and patterns which are creating the market as we know it and thus being definitely worth at least keeping a close eye on the sudden changes of their dynamics.
This is my very first purely educational post and I hope it was helpful :-)
If you have any questions, feel free to ask in comments or PM me.
Originally, I just wanted to publish another trading idea:
Basically, the concept is pretty simple - when the price is testing strong supply/demand zones, support/resistance levels, trend lines/etc, significant volume spikes are always accompanying these attempts and further price moves.
Such an impulse is usually enough for the price to travel certain distance, but is loosing its momentum over time.
In order to keep it moving, the price should be supported by further regular medium or higher than that volume spikes.
If the momentum is lost, the market is entering the flat period.
At the same time, the stopping volume at important key points is usually quite higher than the volume which is just enough to keep the price going in already established trend. Really high volume is a great way to detect that something interesting is going on and that this MAY (but NOT necessarily!) be an indication of a turning point.
I would like to underline that sudden volume dynamics change should not be used directly to predict the future trend, but rather should be used to check if the price really keeps its previous direction or it signifies the increased probability of the reversal.
Volume changes at certain levels are initiating, supporting and stopping the waves and patterns which are creating the market as we know it and thus being definitely worth at least keeping a close eye on the sudden changes of their dynamics.
This is my very first purely educational post and I hope it was helpful :-)
If you have any questions, feel free to ask in comments or PM me.
