Many believe that volume precedes price. Volume confirms the price trend when it increases with an uptrend and decreases with downtrends. When you have a price breakout on declining volumes, this divergence is a warning of decreasing buying pressure. High volumes are common at the beginning of new trends such as a breakout and are typical of market peaks when there is strong agreement that prices will move higher. Volume also often increases due to panic, just before market bottoms.
Low volumes are typical of the uncertain outlook that usually occurs in sideways channels.
Low volume also often occurs during the indecisive period during market bottoms. Volume can help determine the health of an existing trend. A healthy up-trend should have higher volume on the upward movement of the trend, and lower volume on the downward or remedial movement. A strong downtrend usually has higher volume on the downward movements of the trend and lower volume on the upward movements. Volume is often plotted with its Moving Average, often making it easier to interpret the underlying trends.