7 Minute Read

Tales of a Technician: Is Volume Confirming the Rally?

August 1, 2022

By | 1 Comment

Today’s video explores the idea of volume confirmation and why it does or doesn’t matter.

Notes

  • Volume = Measure of Participation
  • Always equal number of buyers and sellers.
  • More demand than supply = prices rise
  • More supply than demand = prices fall
  • Price charts are the footprints of money.
  • Volume reveals big buyers vs. small buyers
  • Individuals = retail traders = small money
  • Institutions = big money = hedge funds, pension funds, endowment funds, banks, = pooled money
  • Assumption = high volume day = institutions buying or selling.
  • Low volume day = lack of institutions
  • High volume up day = accumulation
  • High volume down day = distribution
  • Price is the sentence, volume is the punctuation
  • High volume day = exclamation point = adds legitimacy, urgency to what happened that day.
  • Breakout or a trend reversal on high volume = more believable
  • Breakout or a trend reversal on low volume = more suspect
  • Was that THE Bottom? Or just A bottom?
  • How much emphasis do I put on whether volume CONFIRMS a move?
  • Price always trumps NO MATTER WHAT. Trend reversed higher, it’s bullish.
  • Price trend is up = Bullish.
  • Price trend is up with higher volume during the reversal = More confidently bullish
  • Price trend is up with lower volume during the reversal = Less confidently bullish
  • When I hear people argue that the bullish trend is a fakeout because of low volume. This means they’re bearish or there are other factors.
  • Volume during recoveries is ALWAYS less than volume during crash.
  • Volume AVG

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One Reply to “Tales of a Technician: Is Volume Confirming the Rally?”

  1. MattGuarino says:

    Thanks for this topic I learned plenty. Selective perception and confirmation bias, being stung in the past all play a major role for me. Probably, well most definitely TOO much.

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