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Showing posts with the label price-vs-volume- analysis

HOW TO USE VOLUME WITH CANDLESTICKS

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HOW TO USE VOLUME WITH  CANDLESTICKS the theory behind volume states that the greater the volume, the greater the force behind the move. As long as volume increases, the current price trend should continue. If, however, volume declines as a price trend progresses, there is less reason to believe that the trend will continue. Volume can also be useful for confirming tops and bottoms. A light volume test of a support level suggests a diminution of selling force and is, consequently, bullish. Conversely, a light volume test of a previous high is bearish since it demonstrates a draining of buying power. Although volume can be a useful auxiliary medium to measure the intensity of a price move, there are some factors with volume, especially as they pertain to futures, that somewhat limit their usefulness. Volume is reported a day late. Spread trading may cause aberrations in volume figures especially on individual contract months. With the increasing dominance of options in ma