Using Volume Analysis, we can identify the price trend and assess the conditions that might lead to a reversal. Here, we will concentrate and cover on actual trend reversal patterns. All of the reversal patterns we’ll be discussing can occur in the overall market, in an index or commodity, or in a single issue. Our first three examples show simple trend reversal patterns in the prevailing macrotrend, or longer-term trend.
However, when volume is considered in the analysis, the picture becomes clearer. Take note of how volume activity increased during this choppy period. Choppy price action combined with an increase in volume is a sign of distribution when following a trend. When eager … Read the rest