Essentially, a transaction can only be matched when there are both buyers (Demand) and sellers (Supply).

Therefore, the volume of a candle will simultaneously reflect both Supply and Demand. However, inexperienced traders often jump to conclusions based on the color of the candle.

For example, when seeing a large-volume bearish candle, they will quickly conclude that it is a sign of Supply. In reality, sometimes a bearish candle (red candle) with high volume can indicate an increase in Demand.

- Typically, a trend with gradually increasing volume is considered a trend with 'good health' because it is a sign that the supply or demand is being replenished steadily, meaning the trend is continuously being fueled to keep moving.

However, when the volume suddenly spikes unusually (3-4 times the average), it indicates that the trend is about to end. Because only large institutions (whales) have the ability to create large amounts of Supply/Demand in a short period.

For example, in a prolonged uptrend, if a candle appears with a sudden spike in volume (regardless of whether it is green or red), it indicates that supply has surged, and it is likely that someone or some institution is starting to take profit, thus the trend is at risk of ending.

In the Wyckoff method, this event is called Buying Climax - it signals that the uptrend is at risk of ending, and the market will transition to a Trading Range or even reverse to a downtrend.


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