Price- Volume Analysis

All the daily data you get from the stock exchange in financial technical analysis charts are nothing more than:

1. Price

2. Volume

Only the price and the volume of shares traded are known daily and captured as charts for financial technical analysis. Volume is an important element and can be used to help you identify trade entries and exit.

There are six basic “rules” or guidelines to follow in price-volume analysis. They are:

1. Rising Price + Rising Volume = price will continue to rise

2. Rising Price + falling volume = Bullish trend is dying

3. Falling Price + Rising Volume = price will continue to fall

4. Falling Price + Falling Volume = Bear trend is dying.

5. Falling Price + Sudden Volume surge = bear trend end. Watch for reversal

6. Price at Peak + Sudden volume surge = Bull Run end. Watch for reversal


Below are graphs that show you how the above analysis can be done.

I hope this will give a good picture of how price- volume analysis can help you select entry and exit points in you stock picks.

Enjoy your week.