1. Bottoming with shrinking volume - Major accumulation signal.
• Market Logic: Continued low price and shrinking volume indicate exhausted selling pressure, with major funds secretly absorbing shares.
• Practical Strategy: Remain cautious and wait for a breakout above the neckline with increased volume to enter the market.
2. High volume stagnation at high levels - warning of major distribution.
• Market Logic: Prices at high levels with increased volume but failing to make new highs indicate major players are distributing shares.
• Practical Strategy: Immediately activate profit-taking mechanism, at least reduce 50% of positions.
3. Increased volume and rising price - Trend continuation signal
• Market Logic: Price increases accompanied by stepwise increases in volume reflect continuous new capital inflow.
• Practical Strategy: Use pyramid adding method, increasing positions with each breakthrough of key resistance levels.
4. Shrinking volume and declining price - characteristic of bottom formation.
• Market Logic: Continuous decline in trading volume during the late stage of a drop indicates waning short-selling momentum.
• Practical Strategy: Establish an observation list and wait for a volume-confirmed bullish candle to signal a reversal.
5. Rapid drop followed by slow rise - sign of bullish counterattack.
• Market Logic: After panic selling, a slow ascending pattern appears, indicating major players are accumulating at lower levels.
• Practical Strategy: Position long at the Fibonacci 61.8% retracement level, setting stop-loss 3% below previous lows.
6. Rapid rise followed by slow decline - opportunity for bearish counterattack.
• Market Logic: A violent rally followed by shrinking volume and declining price indicates that major players have completed distribution at high levels.
• Practical Strategy: Establish short positions in areas of high share density, setting stop-loss above recent highs by 1.5%.
7. Extreme volume surge - short-term pullback warning.
• Market Logic: A single day of large volume long bullish candle consumes excessive buying power, requiring technical correction.
• Practical Strategy: Reduce 30% of positions during the next day's peak, maintaining core positions to observe the 10-day moving average support.
8. Panic volume - opportunity for rebound from oversold conditions.
• Market Logic: Extreme selling leads to a sudden increase in trading volume, often accompanied by emotional selling.
• Practical Strategy: When RSI is below 30 and a long lower shadow appears, small positions can be taken to bet on a rebound.
Trading Mindset
• Volume analysis should be combined with trend position judgment, filtering out noise for single-day anomalies.
• Major players often exhibit a complete cycle of 'accumulation - rally - consolidation - main rise - distribution'.
• It is recommended to use the OBV energy flow indicator for cross-validation to improve accuracy of judgment.
• Always set a stop-loss level, keeping any single trade loss within 2% of total capital.
