Volume is the first place to look... Lesson 2

Beginners 101...

A significant change in volume is telling us something is happening
to the opinion and emotion of the people holding an interest in the stock.

This could be Good.....or ..This could be Bad.
That depends on the number of sellers vs buyers trading.

If the high volume is a result of more sellers, then expect
the price to begin to fall.

If the High volume is a result of more buyers, expect the price to move up.

Many times the stock price will continue to move in the current
direction, while the volume, is showing the momentum is changing...

A good example of this is, if you throw a ball in to the air, as it
reaches the highest point, the ball loses upward momentum (slows down) but
continues to move up for a very short period of time.
Then the ball reverses direction ...and increases momentum again in the opposite
direction.

We are looking for this type of divergence of price direction and volume momentum.
In stock price /volume comparison, this principle works in both directions.

Market Trader Tao

"The wise trader always travels with the trend as a mountain stream.
Watching for the change in the current ahead will keep you on
the right side of the trade."

NeboXian