The golden rule of technical analysis is volume precedes price.
Its the most powerful rule in trading but most don't understand how it works.
12 common volume-price examples for you to learn🧵
✅Example 1
Uptrend is supported by steady (if not increasing buying pressure) so trend is strong.
✅Example 2
Sellers step in on the uptrend but you can see the amount of sellers are very low and weak. Continuation of uptrend.
✅Example 3
Into close the uptrend is supported by strong increasing volume so a high probability of continuation.
✅Example 4
Big volume surge but decreasing buying pressure as it heads up so eventually bears come in to takeover.
Buyers are not committed here.
✅Example 5
Big volume steps in causing a little short squeeze but buyers do not step in to support this move so the selling continues.
✅Example 6
Once the breakout happened buyers stepped in to confirm the move. Not very strong breakout but the selling pressure was dropping.
✅Example 7
This is a big hammer candle (so buyers came into the market to push it back up) and the volume is above average.
Reversal confirmed on the NEXT candle.
✅Example 8
Big volume of buyers step into stop the market but the trend is weak because the buyers and sellers are still fighting on the upmove.
Buyers can't break resistance so bears take over.
✅Example 9
Strong downtrend marked with increasing selling pressure and lack of buyers.
Yes, big buyers step in but not enough to keep the price up.
✅Example 10
Neutral or the market is trading in congestion here. There is no clear strength for the bulls or the bears.
So you just have to wait for a market signal or volume to come in. Sometimes the market needs a catalyst or a trigger.
✅Example 11
This was a bull-trap set up. The selling pressure was weak and buyers stepped in causing an explosion but buyers got absorbed by sellers here.
More weakness continued. This was during FOMC so the speech dictated the direction of market.
✅Example 12
Strong green candle (it was actually low liquidity) meaning buyers moved up the price with no resistance but the truth is buyers are not confirming this move at all.
The volume was low and continued to be low. Buyers aren't interested. Weakness continues.
🐯🪙 Share your choice and reasoning in the comments — thoughtful views may receive Tiger Coins!
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