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