Volume Histogram

The Volume Histogram is a representation of the number of securities (or contracts) traded for the instrument over the chosen time period (for example: day, week, month in the case of "end of day" prices or 1 minute, 2 minutes, 5 minutes... in the case of "intraday" prices).

Volume analysis is a fundamental aspect of technical analysis. Volumes provide clues as to the intensity of price movements.

Example

Interpretation

Low volumes characterize investor expectation that manifests during consolidation phases, which are periods during which prices fluctuate within a fairly narrow price range. Low volumes also occur during periods of indecision in a market trough.

High volumes are typical of market peaks when there is bullish consensus. High volume levels are also very common at the beginning of a new trend when prices break out of the fluctuation range. Often, volumes increase just before a market trough following rushed sales by concerned investors.

Volumes can also be used to determine the strength of a trend. A solid uptrend should rely on significant volumes during the price growth phase and low volumes during the subsequent downward phase aiming to correct prices.