Stock Market Volume: How can you tell when volume is drying up for a breakout or a breakdown?
★ SUMMARY ★
How can you tell when volume is drying up for a breakout or a breakdown?
First, let’s take a look at what volume tells you. Volume basically tells you the energy of a stock move, and if a move is real. The more volume a stock has on a break, the more likely it is to stay above that break.
In this video, we’re going to analyze some stock charts and see this in real world examples and situations.
When you evaluate a stock and volume starts to pick up, the stock continues to explode higher. When you get a lot of buyers stepping in, that will push that stock to the upside. The more buyers, the more fuel that stock will have.
However, after a certain period of time, the stock price gets over extended and that stock is ready to pull back. Because we know stocks don’t go straight up. And when it starts to pull back, what happens? Volume starts picking up to the downside and the stock sells off.
Then it takes time for that sell off to reverse direction, but after a while, volume picks up and it starts coming back into the buying side. This is known as the rubber band effect, and it happens in all stocks.
In general, you’re just looking for overextended moves whether that’s to the downside or the upside. If you understand what is realistic, you will have a better idea of knowing when a stock will pause or reverse. Remember that stocks break out, pause, retrace and then move again whether that’s to the upside or downside.
Looking at multiple time frames will help you with this. You can also look at Bollinger bands as well to help you dictate or see where things are over extended.
Spotting price action simply takes time and practice. You need to take the time to look at charts, find trends, and see if you can predict stock movements based on volume, and with practice, you’ll get better and better.
Posted at: http://tradersfly.com/2017/01/stock-market-volume/
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Any book on volume for reading
What are your thoughts on RAD? Do you think it’s going to break out?
Man U the best . Good teaching qualities
We all can analyze a chart after the fact but in reality we don't know how the stock will react. Only the big cows know they control it. Skimming from the little people.
– The more volume, the more real the move
– The more volume a stock has on a break, the more likely it is to stay above that break
Chart
1. Consolidation phase
2. Buying phase, huge green volume
3. Pullback phase, volume starts picking up to the downside
4. Drying out phase, preparation for the next leg up
5. Completion of ABCD pattern
6. Sideways action phase
7. Breakout or breakdown
What are the chances of a breakdown?
– Less bullish volume at resistance
– Buyers dip buying at support
– Seller volume seen against resistance
– How far stretched is the rubber band?
7:20 Once volume starts to dry up and price becomes overextended, significant selling can occur
7:40 As stock becomes cheaper, more buyers will flood in which creates those large green bars
8:00 Look at the volume, its drying up. Selling is happening as it continues to dry up
8:20 if you see volume start to pick up on the sell side it’ll really start to drop
Over-extended Moves Summary
– If you understand what is real or realistic, you will have a better idea of knowing when a stock will pause or reverse
– Remember that stocks breakout, pause, retrace, then move again
– Looking at multiple time frames helps with this
This only applies blue chip stocks.
Thanks Sasha for everything you share with us.
Quest: how do you read climax volume when the price it's close to a support or *resistance*. I still can't comprehend the concept.
Thank you!!
Is this valid for indicees?
Isn't Sasha a girlie boy name ?
stock traded with very very high volume than normal,after three days of gain it reducing very sharply.what it mean ?
in the ABCD pattern you draw at 4min50sec there is an extra retracement in there you ignore. Is that normal – you're just taking the larger ABCD pattern there?
Sasha, another quick question. What does it mean when high volume drops off in a single instant? I know we seen huge volume move in like a rally but I witnessed a stock that was in a rally and in a instance half the volume was gone and the stock stalled. Any ideas?
volumes are bs! decentralized! .. as in.. not really that acccurate! fundamentals of the business is more important
Quick question. If a stock has high volume but price is moving slowly to the down side what does that mean? I thought low volume would drive price down slowly . I understand that huge drops come with large volume but this is high volume and slow decline daily. Your thoughts. Thanks.
Sasha your sexy x
Have to say it again, this is one of the better videos you have out there.
How do I order your books?
dry up? buying volume? selling volume? average volume? none of these were explained. u just used the terms and expected ppl to know what ur talking about…
Oh, this is by far one of your better videos.
Thanks Sasha. Great video. Do you have any on how to use level 2?
Sasha would it be a dumb idea to trader stocks that are moving below the 20-50-200 sma?
I apologize cause im sure you've gotten this question before but what program is that?
Thanks for Posting Sasha.
this was amazingly helpful.
thanks
Great video with great information. Thanks Sasha.
Sasha, is it possible for you to make video on how to day trade using 20-50-200 SMA.
— from India