9. Volume Signals—Tracking Price Trends
Volume is often viewed only as an indicator to confirm price signals to be used only in swing trends. However, volume signals can provide much more, including signals and divergence for longer-term trends. They can also be used to spot the end of uptrends, downtrends, and consolidation.
Divergence is one concept that applies in many volume indicators. As a general rule, you expect to see volume increase as price movement accelerates. But what does it mean when volume contradicts price? In many instances, divergence should not be ignored; it can reveal that the trend currently underway is likely to end soon. This is where confirmation bias plays a role. If you find a reversal pattern, for example, the tendency ...
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