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| Volume action refers to analyzing trading volume patterns to gain insights into market dynamics and potential price movements. Traders use volume action to assess the strength or weakness of a price trend, confirm the validity of breakouts or breakdowns, and identify potential reversals. For example, a price increase accompanied by high volume often signifies strong buying interest, suggesting a robust uptrend. Conversely, low volume during price movements may indicate a lack of conviction, potentially signaling a weakening trend. Analyzing volume action alongside price movements helps traders make more informed decisions about market participation, entry and exit points, and overall trend analysis. |
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 Volume - Technical Analysis from A to Z
Volume is simply the number of shares (or contracts) traded during a specified time frame
(e.g., hour, day, week, month, etc.). The analysis of volume is a basic yet very important element of technical analysis.
The volume provides clues as to the intensity of a given price move.
Volume can help determine the health of an existing trend. A healthy up-trend should have higher volume on the
upward legs of the trend, and lower volume on the downward (corrective) legs. A healthy downtrend usually has
a higher volume on the downward legs of the trend and lower volume on the upward (corrective) legs.
Ease of Movement - Technical Analysis from A to Z
The Ease of Movement indicator shows the relationship between volume and price change. As
with Equivolume Charting, this indicator shows how much
volume is required to move prices.
High Ease of Movement values occur when prices are moving upward on light volume.
Low Ease of Movement values occur when prices are moving downward on light volume. If prices are not moving,
or if the heavy volume is required to move prices, then the indicator will also be near zero.
The Ease of Movement indicator produces a buy signal when ..
On Balance Volume (OBV) - Technical Analysis from A to Z
On Balance Volume ("OBV") is a momentum indicator that relates volume to price change.
On Balance Volume is a running total of volume. It shows if the volume is flowing into or out of a security.
When the security closes higher than the previous close, all of the day's volume is considered up-volume.
When the security closes lower than the previous close, all of the day's volume is considered down-volume.
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