Volume Tutorial:
Up/Down Volume
When analyzing volume, it is very important to know the price trend during
specific time frames. We strongly believe that the market price cannot be
easily
analyzed without volume. Likewise, volume cannot be easily analyzed without price.
Only by analyzing each factor that affects market trend can
you get a clear picture about the current market situation in
real time.
Below you can see some close-ups of charts with different settings
for up/down volume:
up/down volume - off
price - line
|
up/down volume - on
price - line
|
up/down volume - on
price - bar
|
When there is a red volume bar, it
simply means that the close price for the index was LOWER than the
previous close price. Conversely, when the volume bar is green, it means
that the close price for that period was HIGHER than the previous close
price.
Generally, when there are numerous red volume bars (volume that
occurs as the index is moving down) small investors are
selling, and large institutional investors are buying up
the shares that small investors are selling. Once volume of this nature
has peaked, the index generally begins to reverse and move up again.
Likewise, when the index is moving up and the volume bars are green, that
means that institutional investors have begun to sell their shares. It
is generally the small investors who end up buying them, as they are
hopeful the market will continue to move higher.
In volume analysis, the VMA surge acts as a signal for a change
in the index. By using the up/down volume charting feature, you can easily
see what part of the VMA surge is to the upside and what part is to the
downside. Basically, the more red volume bars you see, and the higher the
red bars are, the more likely it is for the market to reverse its
direction and move up. This is conversely true for green volume bars.
|
