Financial Technical Analysis Using Volume

Financial Technical Analysis Using Volume



Financial Technical Analysis Using Volume
Financial Technical Analysis Using Volume
I wonder if ​ you have realized this…
All the data you get daily from the stock exchange in financial technical analysis charts are nothing more than
1. Price
2. Volume
That’s right. ​
Only the price and ​ the number of​ transactions are known daily and ​ captured as​ charts for financial technical analysis. ​
Even though volume is such an important element, very few technical traders make full use of​ it​ in helping them with their trade entries and ​ exit. ​
This is because most technical traders simply do not know how to make sense of​ the daily volume bars in relation to the price action. ​
I ​ present here a​ simple chart explaining what the price versus volume behavior stand for and ​ hope it​ helps you in making more sense in your financial technical analysis.
Financial Technical Analysis Using Volume Defined
Rising Price + Rising Volume = Healthy Bull trend
Rising Price + Declinging volume = Bull trend drying up, hitting ceiling soon
Declining Price + Rising Volume = Healthy Bear Trend
Declining Price + Declining Volume = Bear tredn drying up, bottoming soon.
Declining Price + Sudden Volume surge = Selling Climax, short term support level reached
Price at ​ Peak + Sudden volume surge = Buying Climax, resistance level reached
Financial Technical Analysis of​ Head & Shoulder Formation Using Volume
The volume pattern for a​ head and ​ shoulders top formation is very distinctive. ​

On the left shoulder volume reaches a​ peak. ​
as​ prices move up to the head, volume increases,
but this second volume peak should be lower than that of​ the left shoulder. ​
This higher peak in price,
yet lower peak in volume, is an important signal to the trader that buying interest is far less ardent. ​

Finally, as​ prices rally and ​ form the right shoulder, volume further diminishes.
Financial Technical Analysis Using Volume, Conclusion
I hope this simple explanation of​ what each movement of​ price versus volume means in financial technical analysis can help you, as​ a​ technical trader, attain a​ higher level of​ accuracy when reading your charts and ​ therefore a​ higher level of​ trading consistency.
Read More About How To Use Technical Analysis Systematically at ​ http//www.mastersoequity.com/MOE_startradingsystem.htm




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