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Profiting from Technical Analysis and Candlestick Indicators: Powerful Methods for Accurately Timing Trades by Michael C. Thomsett

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10. Volume Indicators—Confirmation of Price

Some traders believe that volume leads price, whereas others observe the nature of volume indicators to be more likely to lag than to lead. The fact is that volume is a key confirmation indicator, but its timing is inconsistent. At times, volume spikes or indicators coincide with strong reversals; at other times, volume diverges from price trends. At these times, acknowledging the value of the volume indicator over price makes sense—if and when the indicated turn in direction is confirmed. The role of proximity plays a role in these divergence cases as well.

Because volume is an uncertain indicator, it has to be evaluated in context. In finding an inconsistent correlation between volume and price, traders ...

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