Price and Volume Are the Important Entities Used In the Technical Analysis
Price and volume are the important entities used in the technical analysis for analyzing the price movements. There are many indicators which are available for the forecast of the price movements. Volume is an important indicator for price movements. The trends with the increasing volume are more reliable than the trends with low volume. Similarly a downtrend with high and increasing volume also lead to a strong trend. The volume can be used as an important confirmation for generating accurate tips on stock and commodity market.
Volume analysis is the method of reviewing the strength of a trend, based on volume activity. In the market Volume is one of the oldest day trading indicators used by market technicians. Apart from technicians, market fundamentalists also consider the volume or the number of shares traded for a given security.
Thus, it can be concluded that the volume indicator is one of the simplest methods for observing the buying and selling activities of a stock at important levels. However, the most tricky part is that a volume can provide conflicting messages for the same setup. Still, the deciding factor to turn a profit in the market can be calculated based on your ability to judge what the volume is telling you in combination with price action.