Volume, which tells how many stock certificate changed hands in markets within a certain period of time, is generally used for explication and confirmation of price movements. It is expected that high volume accompany with rising, but decrease carries with volumetric contraction at the same time. Volume with this aspect helps to identify turning of trend. That is to say, increasing in trading size reduces towards the end of fall. That can point to beginning of recovery, and decreasing volume towards the end of rising can be a precursor of relaxation. Starting from this point of view, decrease in growing volume and increasing in decreasing volume during a certain period or constant volume can be accepted as initial signals which shows reverse development against existing trend.
The situation is the same in support and resistance zone, too. While beginning to decrease in growing trading volume during breaking of resistance or support means that is approached to another support or resistance, continuation of increase at the same speed is a sign of trend will continue as same direction. High trading volume shows opinion that trend will continue in the same direction is common either increases or decreases. On the other hand, low trading volume points out indecision except from the lowest price conditions.
- Date: 26 November 2016 Sat 00:23
- Last Added
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