Price & Volume Analysis
I'm sure that you have heard the phrase "price & volume analysis" in different financial publications. But what exactly is price & volume analysis? It is a form of technical analysis using 2 of the most widely available technical indicators:
- A stock's share price (price)
- The number of shares traded over a period of time (volume)
Of the 2, a stock's share price is the most commonly available technical indicator. Share prices for stocks can be found in almost every financial publication.
Some financial publications and websites have also started to provide the trading volume now as it has become more commonly used by investors and traders alike.
Think of volume as the "conviction" behind the move. A move that has more "conviction" is usually a less risky trade than a move with less "conviction".
Similar to candlestick patterns, price & volume analysis can be used on 5 minute, hourly, daily, weekly and even monthly candlestick charts. Price & volume should be two indicators that are analyzed simultaneously. But in reality, most investors only look at half of this equation - price. Learn about how the other half of this equation (volume) could help boost your investment returns.
Price & Volume Analysis - Guidelines
Price & volume analysis can be summarized by the following 4 sentences. These next 4 sentences can be applied in any market conditions. That would include both bull and bear markets.
- When a stock's share price goes up and volume increases, this is bullish behavior and typically good as buying pressure is driving share prices higher
- When a stock's share price goes down and volume increases, this is bearish behavior and typically bad as selling pressure is driving share prices lower
- When a stock's share price goes up and volume decreases, this is typically bad as buying pressure is easing which could mean that a short-term top may be near or developing
- When a stock's share price goes down and volume decreases, this is typically good as selling pressure is easing which could mean a short-term bottom may be near or developing
While the above 4 statements may summarize price & volume analysis in a nutshell, the above guidelines also have many different layers of applicability. For example, I use price & volume analysis to confirm Elliott wave patterns - this technique is probably my favorite when I analyze stock charts.
Join Trendy Stock Charts
Analyzing stocks in both a bull and a bear market is imperative, and using price & volume analysis can be one of your keys to success.
To learn more about analyzing stock charts using price & volume analysis, consider becoming a Trendy Stock Charts member today and gain access to the members-only content regarding price & volume analysis.
There is a members-only, private forum for Trendy Stock Charts members called the Idea Chamber. Price & volume analysis is frequently discussed there.
So what are you waiting for? Start down the path to financial success by learning different types of technical analysis skills. Just click the button below and start the subscription process to become part of the Trendy Stock Charts team today!