volume analysis

Just looking at the bar on the 7th Feb this is a volume interpretation of whats happenning

Strength coming in

A down bar closing in the middle or high must be considered as a strong indication of strength; especially if you are now into fresh new low ground. The volume should be very high to ultra high. If the volume is low this is also strength because there is little or no selling presure from professional traders.

If the volume is very high add more strength if the 'news' is very bad.

If the price spread is very wide and the volume very high this could be stopping volume, even a 'Selling Climax' and can mark a low point in the market.


Supplementary Comments:

If the volume is very high then normally you would expect this area to be retested at some time in the future.

If you have weakness in the near background and the market now drifts sideways with little or no demand on up bars this will show that the market is still a weak one.

To stop a major bear market weak holders have to be shaken-out of the market. A weak holder is a trader that has entered the market at some previous high point, if he sold he would be showing a loss. Traders do not like the thought of this so hang on waiting for a recovery. As the market falls even lower and the news starts to get 'bad' brokers will start phoning up asking for more margin money. This is usually enought to make these weak holders dump their holding onto the market. If professional money now buys into this selling you will have a strong market not a weak one.