The Basic Principle—“Volume Leads to Volume”
In his 1971 book, Richard W. Arms Jr. presented a very basic principle. He said:
The cornerstone of price projection in EquiVolume charting is: volume leads to volume. The volume that is generated in the building of a base is almost exactly the volume dissipated in the ensuing advance. Similarly, the volume occurring in a top formation is very close to the same as the volume involved in the subsequent decline.5
This is quite an assertion! Could things really be that elegantly simple? Can it be that if you measure the total volume traded as a stock goes across a base or a top, that this will be the same volume that's traded in the trend that comes next? Indeed, that is exactly what he meant.
Before ...
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