Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology

CONCLUSION

The aim of this chapter is to show traders the importance of understanding volume in technical analysis and how volume can be used to identify the change in trend. When volume is used in conjunction with other supporting indicators, the probability of picking a winning trade is increased. Price represents the consensus value in a transaction between the buyer and seller, and volume represents the financial commitment. In short, volume is the liquidity of the market, without which the market is stagnant. And so, volume is deemed to be the driving force of price movements. Generally, a rising price trend has to be supported by a positive volume trend. When volume fails to support the continuing rising price, it signals a weakening of the rising price trend. On the other hand, when the price is declining with increasing volume, it confirms the continuity of the bearish outlook. A market is healthy when the trends of both volume and prices are moving in tandem. But when the movement of price starts to diverge with the volume trend, the continuation of the prevailing market trend is in doubt. For example, when a price, trading in a narrow range, fails to continue its rising trend despite heavy volume, traders should take note as the price may have reached a strong resistance level. And in reverse, traders should also exercise caution when heavy volume cannot push the price any lower and price continues to hold its trading in narrow ranges; it may indicate the price has reached ...