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Volumes Indicator

 

Volumes Indicator Purpose


Volume is one of the oldest technical analysis indicators in the financial market, which reveals trading activity of investors for a given time period.



Volumes Indicator Usage


Volume indicator is commonly used with price analysis to validate the strength or weakness of the trend, and therefore recognize the possible upcoming reversals.
Trend confirmation:

  • Growing trading volumes during an uptrend confirms bullish mood
  • Growing trading volumes during a downtrend confirms bearish mood.

Trend weakness:

  • If volumes are falling while prices are rising, that may be a sign of uptrend weakness, as demand for the asset may stop at higher prices.




Volumes Indicator Calculation


Volume = total value/number of transactions during a given period.

 

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