Sunday 25 January 2009
thanam:
tech/a's reference would be a good read for you to
begin understanding the reationship between price
and volume. It is a complex one, and an art form,
not one reduced to mechanics, or a fixed method.
A similar bar and volume can have significant difference
in a market that is trending in one direction when at one
area of the trend v a different area of the same trend.
As well, a similar bar and volume can have one meaning
in one trend, and a different meaning when the trend
is in the opposite direction.
A small range bar with average volume could have no
meaning, at one place, a resting spell, for example,
yet have a significant meaning near a top or bottom.
Plus, a sinble bar and volume has more significance
when it can be seen to reflect a pattern of the
developing market activity.
Reading price/volume behavior is a sophisticated endeavor,
and to reduce it to a simple observation would be very
misleading.
Best answer? No easy one.
Cheers!