BCD. Using volume to notice ideal market behavior.Volume is in the foreground once again. One predictor of if a trend will continue, versus if price movement is a momentary aberration, is to see what volume is doing during rises and pullbacks.
For us to say that the up-trending market action will continue it is ideal to see above average buyer volume on the leg candles (the large green/white candles) followed by decreasing relative volume at the same time that price is pulling back.
What is the thing we are trying to avoid? If price makes a big green leg out candle then is immediately followed by equal or larger red selling volume, we might not have as much confidence that the rise in price will continue. We might even think that any proceeding pullback may actually be the start of a more coordinated downward push.
In the example I have charted here you can see large buyer volume on the legging out, then dwindling volume on the the pullback. That's pretty much the gist of it.
For bonus: You may or may not have the idea to check OBV (on balance volume) to determine if accumulation is occurring. The OBV here clearly shows that it is steadily rising in tandem with price. This tells us, at the very least, that this cryptocurrency is no longer in a period of distribution. At least for the present moment.
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The same thing just flipped upside down is true for selling. You want to see large red volume bars followed by diminishing volume bars during the relief rally period.
The best part about this is you don't have to take my word for it. I have searched through my libraries investment section, and read a portion of it. In my opinion (now you might have to take my word), the most useful book is "a beginners guide to day trading" second edition. by Toni Turner. It's just so frickin' simple and good in all the right ways. I had a strong foundation before I started reading it, but it's packed full of timeless trading material, and it reinforced and added on non-destructively to everything I already had acquired. Toni Turner clearly knows how to trade, and also how to make information highly absorbable. I'm grateful the result is a book.
