Trading volume is very important in technical analysis, especially in forex investing.
- Chart is the soul of technical analysis. The chart consists of two main elements: Price and trading volume. If the chart has only price but no volume, then the reliability is reduced by 50%.
- Volume tells us the "footprint of giants", which are the "leaders" in the market, they trade in large volumes and have a great influence on supply and demand, thereby affecting prices (up or down).
- Volume tells us the strength and weakness of the trend. It also tells us how reliable support or resistance level.
- In an uptrend: If the volume increases, the trend is stronger (will continue to increase). If volume decreases, the trend weakens (maybe sideways or bearish).
- In a downtrend: If the volume increases, the trend is stronger (will continue to decrease). If volume decreases then trend weakens (may be sideways or bullish).
- Volume is present in all technical patterns, especially price models used in forex trading.
- Note when analyzing trading volume: Considering the average volume of the price range, it is not advisable to consider single volume.
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