Ten practical tips for identifying stock price trends from the relationship between trading volume and price

1. The normal characteristic of the stock market is that the stock price increases with the increase of trading volume, and this volume increase price increase relationship indicates that the stock price will continue to rise.

2. In an upward trend, the stock price rises with increasing trading volume, breaking through the previous peak and reaching a new high before continuing to rise. However, the trading volume level of the rising stock price in this trend is lower than that of the previous trend. If the stock price breaks through a new high but the trading volume does not reach a new high, then the stock price rise in this trend is suspicious and may be a potential reversal signal.

3. The stock price rises as the trading volume decreases, and when the stock price rises, the trading volume gradually shrinks. Trading volume is the driving force behind stock price increases, and insufficient driving force is a potential reversal signal.

4. Sometimes the stock price gradually rises with slowly increasing trading volume, and the trend suddenly forms a vertical upward eruption market, with a sharp increase in trading volume and a surge in stock price. Following this trend, there was a significant decrease in trading volume and a rapid decline in stock prices. This phenomenon indicates that the upward trend has reached its end, with weak momentum and exhausted momentum, showing a reversal phenomenon. The significance of a reversal will depend on the magnitude of the previous wave of stock price increase and the extent of increased trading volume. How to choose individual stocks? Immediately click on "Read Original Text" at the end of the article to check<<<

5. After a long-term decline formed a bottom, the stock price rebounded, but the trading volume did not increase due to the rise in the stock price. The stock price lacked momentum to rise, and then fell again to near or above the previous bottom. When the trading volume of the second trough is lower than that of the first trough, it is a signal that the stock price is rising.

6. The stock price falls below the trend line or moving average of the stock price form, and there is a significant trading volume at the same time. This is a signal of a stock price decline, indicating a trend reversal and the formation of a bearish market.

7. After a considerable period of decline in stock price, panic selling occurs. With the increasing trading volume, the stock price drops sharply. After the panic selling, the expected stock price may rise, and the low price created by the panic selling is unlikely to fall below in a very short period of time. A large number of panic selling often indicates the end of a bearish market.

8. After a long period of continuous rise, there was a sharp increase in trading volume, but the stock price rose weakly and hovered at a high level, unable to rise significantly again. The stock price fluctuated greatly at a high level, and the selling pressure was heavy. After a continuous decline in stock price, a large trading volume appeared at a low level, but the stock price did not further decline, with only a slight change in price. This is a signal of purchasing.

9. The transaction volume serves as a confirmation of price form. Without the confirmation of transaction volume, the price form is virtual and its reliability is also lower.

10. Trading volume is a leading indicator of stock price. Generally speaking, volume is the forerunner of price, and as trading volume increases, stock prices will eventually catch up; When the stock price rises without an increase in trading volume, the stock price will eventually fall. In this sense, it can be said that 'price is virtual, only quantity is real'.

Time plays a very important role in making market judgments. A formed trend will not undergo fundamental changes in a short period of time, and any reverse fluctuations in the middle will not have a significant impact on the original trend. A formed trend cannot remain unchanged forever, and new trends will emerge after a certain period of time. The cycle theory focuses on the time factor, emphasizing the importance of time. In a sense, space can be considered as one aspect of price, referring to the limit that price fluctuations can reach.