Volume analysis confirms price movements from "summary" of Charting and Technical Analysis by Fred McAllen
Volume analysis plays a critical role in confirming price movements in the market. When the volume of trading activity increases along with a price movement, it serves as validation that the price change is significant and not just a random fluctuation. For example, when a stock price rises on high volume, it indicates strong buying interest and conviction among market participants. This surge in trading activity suggests that there is a broad consensus among investors that the stock is worth more, leading to a sustainable uptrend. On the other hand, if a price increase is not accompanied by high volume, it may be a sign that the rally lacks conviction and could be short-lived. Conversely, when a...
Similar Posts
Prospect theory illustrates how investors weigh potential gains and losses unequally
Prospect theory, a concept developed by Kahneman and Tversky, sheds light on how investors tend to evaluate potential gains and...
Financial planning is crucial for achieving longterm financial goals
Financial planning is the bedrock upon which long-term financial goals are built. It involves setting specific objectives, crea...
Stay disciplined when investing
Investing requires a disciplined approach, where one must resist the urge to follow the crowd or make impulsive decisions based...
Confidence and fear are powerful market drivers
Confidence and fear are indeed powerful market drivers. When investors are confident in the future prospects of a company or th...
Invest in real estate for diversification
Investing in real estate can provide a valuable source of diversification for your investment portfolio. By adding real estate ...
Analyze market trends and patterns to make informed decisions
To succeed in the stock market, it is crucial to pay careful attention to market trends and patterns. By analyzing these trends...
Approach investing with a sense of curiosity and wonder
When it comes to investing, one of the most important lessons I learned from Darwin is to approach it with a sense of curiosity...
Remain adaptable to changing market conditions
To succeed in the foreign exchange market, it is crucial to be flexible and responsive to the ever-changing dynamics of the mar...
Stay updated with regulatory changes in the market
It is crucial for investors and traders to keep themselves informed about any regulatory changes in the market. These changes c...
Debasing the currency devalues savings
When governments debase their currencies, they are essentially reducing the value of the money in circulation. This can have a ...