VOLUME

VOLUME

Volume is the total number of shares of transacted during a specified period. Although this is a rather basic indicator, volume can provide some very powerful clues to anticipate price behavior. Volume is viewed as a measure of market strength or weakness.

One interpretation for volume can be used to determine the strength of a trend, or confirm the movement of the price. To make it short, volume is the source of the price rally, and if during a falling market with srong volume, suggests a strong selling pressure.

An uptrend or a rally with strong volume is likely to continue, whereas an uptrend or a rally with thin volume is likely to reverse at anytime. To determine whether the volume is strong enough to support any rally, use a volume moving average of 40 days trading volumes (VMA). When the volume of the day is higher than the 40 days VMA, it suggests that the volume is relatively strong enough to support a rally.

Volume is particularly useful and effective in detect divergence. When price is making new highs from the previous top, while volume has decreased from the previous peak volu
http://flo-stockchatroom.blogspot.com/2009/05/volume.htmlme, it suggests a relatively weak or lack of buying interest.