#Day106 : How to Interpret Volume and Price Action Together
Understanding price action is key, but combining it with volume takes your trading to the next level. Price shows direction, while volume reveals the strength behind that move. When price increases with high volume, it confirms strong buying interest and suggests the trend may continue. However, if price rises on low volume, it could signal a weak or fake breakout. The same applies on the downside—if price drops with rising volume, it indicates heavy selling pressure and potential continuation.
Look for volume spikes near support or resistance zones—they often signal breakout or reversal zones. Also, confirm candlestick patterns with volume. For example, a bullish engulfing candle backed by high volume is far more trustworthy than one on low volume. Volume can act as a lie detector for price action, filtering out fake moves and guiding better entry and exit points. Mastering this combo helps traders make smarter, more confident decisions.
