The following three volume-price rules are particularly noteworthy:
1. Price up, volume up → Healthy trend
An increase in price accompanied by a significant expansion in trading volume usually indicates a continuous inflow of funds, with a higher credibility of the trend and a greater probability of continuation in the future.
2. Price up, volume down → Diminishing momentum
An upward price movement but shrinking trading volume often signals insufficient buying power, and it may indicate that funds are exiting at high levels. Even if there is a short-term spike, if there is no strong follow-up, it is likely to fall back.
3. Price down, volume down → Reduced selling pressure
During a decline, the trading volume gradually decreases, indicating that selling pressure is gradually exhausting, and the market may be close to a rebound. This is often a good time to position for buying low.
In summary, only by understanding volume and price can one truly grasp the rhythm of the market.
