So, high vol clusters without a corresponding downmove in price action can be seen as bullish, whereas high vol clusters and big moves down are very bearish.
So Lets talk volumes
What constitutes volume of interest
Volume 5 x or more than the average daily volume over a month.
Or Under the same value. The bigger the better but anything well
over our under a normal volume should be investigated.
First thing we have to look at is where it is ------
Context of Volume in a chart.
(1) High volume and in particular if it is also supported by a gap and range
indicates a great deal of effort to move in a particular direction. (Bullish OR bearish.)
See labelled (1) This generally occurs after a longer period of consolidation.
In The bar labelled (2) we can see a smaller testing consolidation after the strong
move up. At the high of the range of the consolidation we can clearly (NOW) see
accumulation as Supply is met with Strong buying. The next bar rises easily and if you follow
the trend UP you'll notice the Dance of Volume as the stock rises and contraction of volume in
consolidations. When you are in a move this is what you want to see.
Look now at Bars (3,4,5,6) These bars show that supply is not taking part in the consolidation and until
it does price will remain at levels around the high prior to consolidation. This will also occur in Bearish
down moves of any depth.
So this first
CONTEXT is in a bullish initial move.
The next is in a continuation of a move. Note that moves can move either bullishly OR bearishly WITHOUT
extreme volume or range. The exercise here is to talk about those times when volume is evident and is
in enough quantity for us to take immediate notice.