Practical skills for understanding the underlying meaning behind the closing trading volume

During the rise or fall of stock prices, the results of the closing session, followed by the opening of the next day, may vary greatly. Insight into these subtle tail market changes is usually a winning strategy that short-term investors dream of, and the most important basis for judging this situation is the overall operation status of the stock price's 10 day moving average.

(1) Rising (when the 10 day moving average of the stock price shows an upward trend)

The increase in volume and price at the end of the trading day: The increase in volume and price at the end of the upward trend is a sign of sufficient popularity, indicating that investors in the market are still optimistic about the future development. Therefore, there is a high possibility that the stock price will continue to open at a high level on the next trading day.

Closing price increment contraction: This situation is often a reluctance to sell phenomenon during the peak stage of the uptrend. On the next trading day, the stock price usually jumps short and opens high. Investors who did not buy at the end of yesterday's market usually fill in the high unit price to chase the rise and buy. However, due to insufficient turnover of stocks, after a high opening, the selling pressure gradually increases with the increase of profit taking orders, and the candlestick pattern of the next trading day often has an upper impact line.

Large amount of sharp decline at the end of the trading session: If it is not during the stage of huge gains and the appearance of a large amount of long negative candlestick pattern, then the phenomenon of significant sharp decline at the end of the trading session is mostly due to the main market makers controlling the market using the end of the trading session to clear the market. The stock price on the next trading day is often set to open at a flat or high level, but the premise of this situation is that the trading volume at the end of the day should not be too large in a certain principle.

(2) During consolidation (when the 10 day moving average of the stock price shows a flat trend)

At the end of the consolidation phase, the main forces of both long and short sides engaged in a prolonged battle, ultimately gaining the upper hand through the efforts of multiple main forces. If the market suddenly launches an attack at this time, the stock price will often open at a flat or high level on the next trading day.

The increase in price drop at the end of the trading session: In the consolidation trend, there is a phenomenon of an increase in price drop at the end of the trading session, indicating that the main players of both long and short sides are in a evenly matched confrontation. The main players of multiple sides have lost their support and confidence, while the main players of the short side have taken advantage of the situation and gained the upper hand. The outcome has begun to be determined. At this moment, the market suddenly launches an attack, and the stock price often opens at a flat or low level on the next trading day, and most of them gradually enter a period of decline due to the inability of multiple main players to counterattack.

Pre closing price and volume increase: In the consolidation trend, the stock price is about to encounter a checkpoint. If there is a sudden large amount of sharp pull in the end of the trading day, the stock price on the next trading day will mostly open at a high level in a breakthrough style. However, due to the fact that the main market makers do not want or do not have the strength to attack, they only use the end of the trading day to launch a surprise attack, creating a false impression of upward breakthrough, tempting off exchange investors to chase after the rise and buy long, and taking the opportunity to sell and clear their positions. Therefore, it is extremely easy to form a high opening and low falling, with a false breakthrough leading to a consolidation ending.

(3) During a downtrend (when the 10 day moving average of the stock price shows a downward trend)

Last day price decline and volume contraction: In a downward trend, the phenomenon of a decrease in volume at the end of the day indicates that no one is willing to take orders from buyers, and the selling pressure will be transferred to the opening of the next trading day, causing the stock price to sell quickly and open at a lower price on the next day.

The phenomenon of both price and volume increasing at the end of the trading session: In a downward trend, the appearance of both price and volume increasing at the end of the trading session generally leaves a shadow line on the candlestick chart. There are two possibilities for the trading trend: (1) when the RSI is not at a low level and the candlestick is closing in the middle of the day, there is an opportunity for a rebound due to the intervention of short-term funds. However, if the stock price remains below the level on the next trading day, it may be due to the main market makers using the tail market to pull up and attract more, in order to lower the next day's sales. This is a signal that the market will jump short and move downwards. (2) When the RSI is at a low level and the candlestick is shrinking, with both volume and price increasing, and the timing of the occurrence is at the low level of the 6-day RSI, the next trading day is often marked by high opening and triggering a rebound trend.

(4) Special circumstances

In the midst of a sharp rally at the end of the trading day, a corrective rebound began to appear, but near the end of the day, it was suppressed to the lowest point, indicating that the bearish main force still dominated the advantage. This trend will open at a flat or low price on the next trading day, and the stock price trend on the next trading day is easy to fall but difficult to rise.

A clear upward trend had already formed before the end of the trading session, but in the last 10 minutes of the session, there was a rush to buy, resulting in a significant increase in trading volume and driving the stock price higher. This situation is usually driven by speculative short-term traders who intervene to chase the rise, which is not very favorable for the next trading day's trend. After the stock price opens high on the next trading day, due to the pressure of short-term profit taking, if this part of the selling cannot be digested, the upward trend will be difficult to sustain, and the selling pressure will generally quickly emerge after the high opening.