General Rules in Volume Analysis

The market is bullish if a new high occurs with heavy volume. A new high on light volume is deemed temporary.

A new low price with high volume is a bearish indicator. A new low on light volume is less significant.

A rally to a new price high on expanding volume but with less activity than the previous rally is questionable. It may point to a coming reversal in trend.

A rally on contracting volume is questionable. It warns of a possible price reversal.
If prices advance after a long decline and then go to a level at or above the previous trough, the indicator is bullish when volume on the secondary trough is less than the first.

If the market has been increasing for a while, an anemic price increase coupled with high volume is a bearish sign. After a decline, substantial volume with minor price changes points to accumulation, typically a bullish indicator.


Volume Price Interpretation
Increasing Rising Bullish
Decreasing Falling Bullish
Increasing Falling Bearish
Decreasing Rising Bearish
Trend AnalysisVolume

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