Unit 1 · Technical Analysis Basics

Volume Analysis

Lesson 6 of 86 min5 exercises

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Volume: The Truth Serum of the Market

Volume shows how many shares traded during a period. It's often called the "truth serum" because it reveals the conviction behind price moves. Price tells you what happened; volume tells you how significant it was.

Basic Volume Principles

Volume confirms price moves:
- Price up + High volume = Strong move, likely to continue
- Price up + Low volume = Weak move, may reverse
- Price down + High volume = Strong selling, more downside likely
- Price down + Low volume = Weak selling, potential bounce

Example

GME jumps 10% on 5x normal volume → Real buying pressure, trend likely continues GME jumps 10% on normal volume → Could be a short squeeze or low-liquidity spike, be cautious

Always check volume on significant moves