Despite being one of the most reliable clues that a trend is losing steam, volume exhaustion is frequently overlooked by traders — especially retail and beginner traders. Here's why:
1. Most Traders Focus Only on Price
Many traders obsess over candlestick patterns, trendlines, and indicators like RSI or MACD, but rarely look at volume — even though it tells you how committed the market is to a move.
A price drop looks scary
But if volume is shrinking, it means fewer participants are selling — and the drop is weak.
2. Volume is Harder to Interpret
Volume doesn’t always have a “standard pattern” like RSI or MACD.
There’s no single number that says "volume is exhausted"
It requires contextual analysis: compare to past bars, watch for shrinking spikes, and spot divergence from price action.
Many platforms also don’t alert you automatically for volume patterns — they need manual checking.
3. False Confidence in Downtrend Momentum
Traders often assume:
“If price keeps falling, it must still be bearish.”
But that’s a trap.
If price is falling but volume is fading, it shows:
Sellers are no longer aggressive, and a reversal is building silently.
The lack of conviction is often missed without volume analysis.
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