Price volume analysis

Price volume analysis

Stock futures December 22, 2019

Price volume analysis




  1. Use Price volume analysis as an exhaustion indicator
  2. Let say index has a trading volume of 1000 in the up move and 500 in a down move
  3. When price moves up with high volume in a small time frame index will be at a high point and when price moves down with high volume in a small time frame index will be a low point.
  4. The volume shows how hard the index is moving in a particular direction at a particular time
  5. When everyone tries to enter the market at the same time the index will move at a high point
  6. When everyone tries to exit the market at the same time the index will move  at a low point
  7. Condition for up move reversal.
  8. Note the volume from one high to another. Volume at the other high is lower than the previous high indicating negative divergence.
  9. It suggests that the force in the second high is less than the previous then that the market should reverse.
  10. This worked with both up move and in the down move.
  11. Condition for down move reversal.
  12. Note the low point of stock with high volume
  13. When the stock price tries to test the low Again check the volume
  14. If the volume in the second down move is less than the previous down move then a bullish divergence is created and stock can bounce back from the low point.
  15. This rule will not change from one-time frame to another 

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