The complete introduction to forex volume indicator as a powerful price validation tool. I never argue with the tape- Jesse Livermore. Firstly introduced trading through a ticker-tape from the past fortunes using volume indicators in their forex trading.
Use Forex Volume Indicator with Price Action
Three questions about volumes? Is Volume still relevant today? Is it relevant to the forex market? Can it be applied to all trading and investment strategies?
Is Volume still relevant today?
- At its core, volume
- Reveals the true trading activity of professionals or market makers.
- you can easily combine supply and demand with sentiment and validates price with volumes.
- Volume still relevant today as it has become the fact of standards technical analysis.
I hope all are understand the first question.
Forex Volume Indicator Is it relevant to the forex market?
- Volume is only one tool and leading price validation technical tool for Retail trader.
- volumes represent true and honest market activity “90”% of the time. its analysis perfect. I granted you.
- so The answer to 2nd question also yes.
Can it be applied Forex Volume Indicator to all trading and investment strategies?
- Volumes analysis on interday timeframe (i.e 4 hours and smaller timeframe) are weaker please Compared to analysis on a larger timeframe. (i.e daily and avobe )
- Larger the timeframe, you see truer the picture on volumes on any forex pair.
let’s see Daily chart volumes and 4-hour chart volumes.
You can easily understand which timeframe is clear on volume indicators
carefully implement volumes in interday strategies as volumes are less effective on a smaller timeframe.
The key guiding principles of volumes analysis:
- The Los was not bad luck, it was just bad analysis.
- Guidelines to position yourself (as a retail trader) with professionals as they build for the next big move trend.
Principal no 1: Volume is an art not science.
After an uptrend /downtrend, a market does not reverse upon a signal reversal price action pattern associated with high volume. It pauses, consolidates, and then reverses.’Forex Volume Indicator’
Principle No 2: Volumes validation or anomaly
- Validation: Confirms the continuation of the trend.
- Anamaly: Signals a potential price reversal is due.
Principle No 3: Present Volumes are not relative to past Volumes:
In order to validate a price or to detect an anomaly in price, only recent volume bars (Large or Small) associated to that price action must be studied.
Volumes and price action: No price is too high for a bull and too low for a bear. Guidelines to consider while combining volumes with price candles.
How to use volume to validate price reverse signaled by price action pattern?
- The length of a tail or a Shadow, either to the top or bottom of the candle is always the first point of focus because it instantly reveals, Impending strength weakness, and indecision, and more importantly, the market sentiment. (e.g. signal top, signal bottom, shooting star, Hammer, Doji)”Forex Volume Indicator”
- If there is no tail or shadow, then this signals a strong market sentiment in the direction of the closing price. (e.g. Engulfing pattern, Double Beer and Double bulls)
- Volume validates price. Start with the candles and then look for validation and anomalies of the price action by the volume bar. ( Applies to all patterns)