Volume, the Confirmation

How much conviction was behind the move.

Same breakout, different conviction resistance heavy volume Price tells you what happened. Volume tells you how many people were involved. A move on heavy volume means many participants agreed; the same move on thin volume means almost nobody did, and it is far easier to reverse. Breakout on heavy volume Real participation. More likely to hold. Breakout on thin volume Few buyers. Prone to fail and snap back. Rising price, falling volume The move is running out of participants. A warning. Heavy volume at a top or bottom A climax: the last of the crowd piling in, often right before a turn. On NEPSE, volume matters more than on a deep market, because many stocks trade thinly. A 5% move on a handful of trades is not the market speaking, it is two people. Always check whether there was anyone there.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Charts.