Re: Recognising Volume-----opportunity or trap.
technicals not my strong point but have been enjoying reading and learning on this site and starting to apply some of it.
My view - bar 1 breakout on volume - very bullish.
bar 2 gap up bullish, then it retraced but this is on lower volume - so sellers weren't prepared to let go. It also still closed above previous days close so still bullish.
bar 3 - higher volume top - buying volume increased but still didn't beat sellers - bearish.
bar 4 - gap down on open - then rising, but on lower volume than previous day - so buying exhaustion - failed to close above previous day - neutral/slightly bearish.
bar 5 very high volume but still failed to significantly overcomes sellers. I think the sellers in bar 5 are probably buyers from the previous few days looking to escape, while the buyers on this day are looking for short term gain, because long termers have had an opportunity for four days now and would have taken it earlier and HELD thus creating low volume on this day. So the high volume in this bar indicates previous spec buyers selling. The new buyers are probably also spec buyers because long termers have had ample opportunity the previous 3 days. The high volume means that there is an even larger number of short term holders now looking for an exit and likely to panic on softness.
So I reckon its likely to fall on the next bar. I think the last bar would have been bullish if volume was low, but the high volume without a significant rise is bearish.
I've probably just proven that I should stick to fundamentals!
(but while I'm enjoying the fantasy let me continue
)
Rejection of lows prior to breakout and the actual breakout itself are still bullish overall, so possible retrace back to 5.4 over next couple of bars, then consolidation in 5.2 to 5.4 range before continuation of uptrend.