welcome back to another video. Soil here, and today I want to talk about volume. I'm going to teach you how you can effectively analyze volume to identify any potential changes in the direction of the market. Stay tuned, and let's get started. Alright, as you know, volume is one of the most important tools in technical analysis, especially in price action analysis, and it plays an important role in many trading strategies. So, learning how to analyze volume in conjunction with the price movement is an important skill that you must develop. To give you a simple definition, volume shows the number of units that change hands in a given period of time. For example, in Forex, it's the total amount in terms of the currency; in the stock market, it's the number of shares; in the Futures Market, it's the number of contracts; and in the cryptocurrency market, it's the number of coins that are traded over a period of time. Paying attention to volume is important for both short-term traders and long-term investors, and besides technical analysts, fundamental analysts also carefully watch the volume because, on one hand, volume shows liquidity level.

and on the other hand, it shows the number of units or the amount of money exchanged for that asset in a given period of time. In other words, it shows the interest of the market for that financial asset, interest of the market in whether buying or selling. In technical analysis, volume is an essential part of analyzing charts, and besides giving insight about possible changes in the direction of the market, it also plays an important role of confirming trades in many trading strategies. Volume is usually represented at the bottom of price charts. As you can see here, we have some vertical bars, usually green and red, and each bar shows the volume on the selected time period. For example, this is the price chart of Apple, and the time frame of the chart is set on one day, so each bar shows how many shares are traded on each day. When a red bar forms, it means that in that time period, the price closed below the opening price. Actually, a red candle formed on the chart. And when a green bar forms, it means that in that time period, the price closed above the opening price.

and a green candle formed on the chart. So, the green bars are considered as buying volume, and the red bars are considered as selling volume. But regardless of the color, every time that a buyer and a seller transact shares, contracts, currency, or whatever the asset, the volume increases. For example, here, every time that a buyer buys one share of Apple from a seller, one share is added to the total number of volume for that time period. Alright, now let me explain how volume and price are related to each other. Consider we have company X, and the current price of its share is ten dollars. Now consider we have two trading scenarios. In scenario A, a buyer buys 100 shares of X by placing a buy order one dollar above the current price. And in scenario B, a buyer buys 10,000 shares of X by placing a buy order one dollar above the current price. In both of these cases, the price of X increased one dollar. And when you look at them only through price perspective, you can settle them equal because in both of

cases, the price increased one dollar, but they are not the same. In scenario A, we have a one-dollar increase that its value is equal to 100 shares, but in scenario B, we have a one-dollar increase that its value is equal to 10,000 shares. Here in scenario B, the move is more bullish because the buyer or the buyers are showing more interest in this stock for a reason, and they are proving this by putting more money. When we have an increase in the volume, it means that something has happened, a fundamental change, anything that caused traders to suddenly decide to buy or sell heavily. So, by analyzing the volume in conjunction with the price movements, we can measure the strength of advances or declines to correctly analyze the market movements and forecast possible changes. Generally, volume is used in three ways: confirming trends and evaluating their strength and weakness, confirming reversals, and confirming breakouts. Let's go through each of them in detail with examples on the chart. As I just said, we can use volume for confirming trends and evaluating their strength and weakness.

if you don't know how to identify trends or draw trend lines, I have a complete guide on this. The link is also placed in the description of this video, and I highly recommend you to watch it because trends and identifying them on the chart is one of the most important aspects of technical analysis. All right, let's get back to volume and see how it helps us with evaluating trends. When the price is in an uptrend or downtrend and we see an increase in the volume, that shows that the advancing or declining of the price is real and it has strength. For example, on this chart, you can see that here we have a reversal and the price started advancing. Here we have a consolidation and a triangle pattern formed, and you can see that the volume decreased and became flat in this period. After that, the price broke the triangle and continued its advancing. If you look at the volume, you see that the volume is increasing and shows growing interest among traders over this period of time. This increase in volume

actually indicates that market participants are more interested to buy because of a reason, and this interest to buy is moving the price higher and higher, as you can see. Or in another example here, you can see that the price is in a downtrend, the volume is increasing, and this shows selling interest among traders because of a reason. Market participants are more interested to sell over this period of time, and as high interest to sell is moving the price lower and lower, as you can see in the ideal situation in the corrections or pullbacks when the price moves against the trend. We must see lower volume, and we must see an increase of the volume when the price turns back in the direction of the trend and moves in that way. Having this situation indicates that the trend is strong, and the probability for continuation of the trend is higher. In case if we have high volume and the pullbacks, just like what you see here on this chart, it shows that the trend is losing strength, and there is a possibility that the trend may end and the price go to a trading range like

what happened here or the reversal may happen. So when you're analyzing the volume, you should also check the volume on the pullbacks to see how it's playing on the chart. Here we are in a downtrend; the volume is increasing over time, but buyers are also active and strong in this period, and you see that in the pullbacks. We have increased in the volume; that shows that the interest and tendency for buying exist, which causes weakening of this downtrend. And when the price is advancing or declining and volume is decreasing, that shows that the trend is weakening. For example, here on this chart, you can see that we have an uptrend, and the price is moving higher and higher, but if you pay attention to the volume, you can see that the volume is decreasing and shows that buying interest is decreasing. And this lack of interest causes the trend to lose strength, and it gives the possibility of reversal and turning off the points to a trading range or downtrend. In this situation, if we have higher volumes and

the pullbacks it gives even more probability that the counter-trend movements are gaining strength, and a reversal of the price is probably going to happen. In another example here, you can see that the price is in a downtrend, and if you look at the volume, you can see that the volume is decreasing. This shows that selling interest is decreasing, and this lack of interest in selling causes the downtrend to lose its strength and gives the possibility of reversal. Please pay attention that an increase in volume in uptrends or downtrends is not always a sign of strength and further continuation of the trend. In cases that we have exhaustion moves, it can be a sign of reversal. Exhaustion moves or sharp advances or declines alongside an extreme volume, the volume is higher than the average volume, and sometimes it can be even up to five times greater than the average, shows the possibility of ending the trend. For example, on this chart, you can see that following this uptrend here at the peak of the trend, we

have a sharp increase in the price, alongside a spike in the volume. You can see that it's much higher than the average level, and this shows that lawyers got exhausted with no more buyers or just a few buyers to push the price to higher levels. Having this situation can show the possibility that the trend is probably ending, and a reversal may happen. As I mentioned at the beginning of this video, another use case of volume is confirming breakouts. When we encounter a breakout, like breaking of support or resistance levels, or breaking of trend lines or other patterns, volume plays a very important role in confirming the breakout. When a breakout happens, we must see a considerable increase in the volume, which shows that the move is strong. If a breakout happened and we have little change or no change in the volume, it shows that there is a lack of interest among traders for breaking that level, and it's more probable that the breakout is a false breaker. For example, here on this chart, you can see that we have a resistance level, and the price

broke this level with an increase in the volume, which shows that there is interest among traders to buy, and the breakout is a valid breakout. Or in another example here, you can see that we have a triangle pattern, and the price broke this level with a significant increase in the volume, which indicates that there is interest among market participants to buy, and this breakout is considered to be a valid breakout. Volume is very important in technical analysis, and it's an effective tool for evaluating the strength or weakness of the price movements. Volume alone doesn't provide any information about the possible direction of the market, but when analyzed in conjunction with the price, it provides valuable information about the current direction of the market and any potential changes in the direction of the price. Alright, that's it. Thank you for watching this video. If you have any questions, feel free to ask and leave a comment for me. I'll answer your questions as soon as possible. If you haven't subscribed to my channel, please subscribe and hit the bell so you get the notifications of my new videos. See

you guys in the next video, and good luck with your trading.

STOP Trading Until You Learn Volume Analysis..Volume is the KING. (MUST-WATCH Video for All Traders)

STOP Trading Until You Learn Volume Analysis..Volume is the KING. (MUST-WATCH Video for All Traders)

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