We use volume as one of the basic high level filters for our market system and rely a lot on the basic premise that volume precedes price . As chart technicians, we look for a loss or surge in volume to indicate a pending market reversal or confirmation of an upward trend. Before we go into more detail, let's summarize the basic indicators of volume. Fundamental rules for volume If volume follows price, the market is strong and should continue upward. If volume expands on price weakness and declines on price strength, the market is weak and should go lower.
Volume is more important on the uptrend.
Volume increase at market tops is not critical. All statements and expressions are the opinion of Choice Capital Management and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. Any securities trading or investing carries a certain degree of risk. The user of this site should proceed with caution and be responsible for researching the featured securities by their own account before making any investments. All trading system results are based on back testing the system over the years shown, not real trades executed.