May 1, 2020 at 8:46 PM #272282Nitin BhatiaKeymaster
To watch, please click on the following link
Volume Price Analysis in Stock Market is one of the most reliable trading setup or system for technical analysis. Volume analysis is considered as one of the leading indicators. As per technical analysts, the volume precedes the price. Therefore, it is considered as one of the most dependable analyses by the investors and traders.
There are 4 basic principles of the Volume Price Analysis
1. Increase in Price and Volume suggests a bullish market or stock
2. The decrease in Price and Volume also means positive sentiments
3. Increase in Price with a decrease in Volume is a bearish signal
4. The decrease in Price with an increase in Volume is negative for stock or index management.
The basic objective of the volume analysis is to find out whether the big players are active in a stock/index or not. Also, it is relative i.e. depends on the free-float market capitalization of the stock. Therefore, it is not right to compare the volume of two stocks.
The second step of the price-volume analysis is to check whether the stock or index movement is real or fake. It can be checked with the help of the delivery % data. Lastly, if you are a trader then you should check the volume in the derivatives segment to catch the speculative up move or down move.
With the help of Volume and OBV (On Balance Volume), you can find out the accumulation and distribution in stock. An increase in OBV and price in a narrow range after a downtrend is a sign of accumulation and a decrease in OBV with a narrow price after an uptrend is distribution. However, in my opinion, OBV is not reliable for index.
Lastly, the volume also tells about the trend strength.
- You must be logged in to reply to this topic.