1. When the bottom of trading volume appears, it is often the same as the bottom of the stock price. The assessment of the bottom of trading volume is based on past bottoms as a standard. After the stock price falls from a high position and the trading volume gradually decreases to the past bottom average, the stock price stabilizes and no longer declines. Afterwards, the stock price shows a trading range and the trading volume shrinks to its limit, resulting in a trend of price stability and volume contraction. This phenomenon is called the bottom of the market.
The important pattern at the bottom is that the volatility of stock prices is decreasing. Afterwards, if the trading volume continues to shrink, the stock price will continue to rise until the trading volume gradually increases and the stock price remains firm, with the ability to attack upwards only after the price and volume cooperate. The increase in trading volume from contraction represents a change in the supply and demand situation. The phenomenon of changes in trading volume goes from huge volume decreasing → stable trading → increasing → huge increase, like a circular arc, which is the bottom of the circular arc of trading volume. After the arc-shaped bottom of trading volume appears, it indicates that the stock price will reverse and rebound. The degree of increase and strength of its rebound depend on the magnitude of the increase in trading volume after the appearance of the circular bottom. If the amount of increase is extremely large, its ability to rise slightly will be stronger. The shrinkage of trading volume in the bottom area indicates a significant reduction in floating chips, high stability of chips, and weakened killing power, resulting in a phenomenon of price stability and volume contraction.
If there is an increase in trading volume afterwards, it means that someone is eating, so there is no purchase. How can we ship? So at this point, the supply and demand for chips have changed and are brewing an upward trend. Special attention should be paid to stocks with bottom trading volume. When the decline of a stock gradually narrows or a gap in price appears, the trading volume usually shrinks extremely, and then the volume increases and the price rises. This is when the stock price rebounds from the bottom.
2. The subtle changes in trading volume require careful attention. A general prerequisite is that the trading volume must first shrink significantly. Without this, there can be no problem of selecting stocks to catch dark horses. The decline in trading volume reflects many problems, among which the most crucial one is that the stability of the chips is good, which means that no one wants to sell the stock anymore, and at the same time, the stock price does not fall. This further indicates that the market's selling pressure is exhausted, and only then can a dark horse stock develop with skyrocketing prices. The decrease in trading volume best reflects this sign. The trading volume suddenly increases from a certain day and then maintains a certain amplitude, almost staying at this level every day. This change indicates that a new force has intervened in this stock and is systematically investing funds to absorb it. This kind of intervention often causes stock prices to rise, but at the end of the market, someone intentionally lowers the stock price, and their purpose is clear. So we can see on the daily chart that as trading volume increases, stock prices rise slightly, but often form a cross star shape when the stock market falls.
3. The bottom momentum and trading volume of long-term bull stocks can be said to be the momentum of the stock price. Before a stock rises sharply, it often has already fallen or consolidated for a long time. At this time, the trading volume shrinks significantly, and then there is continuous amplification or mild trading volume while the stock price rises. A stock with bottom trading amplification is like a stock that must have sufficient fuel before it can take off. Only with sufficient bottom momentum can the stock price be pushed to a very high level. Therefore, a stock that is preparing for a crazy rise must have a trading volume at the bottom, and the trading volume must continue to increase in the early stages of the rise, with a combination of volume and price. After the main uptrend, there is often a strong trend of price increase and volume contraction, known as a no volume crazy rise.
Basically, volume contraction is a signal of reversal. Only with volume contraction can there be a possibility of stopping the decline. During a downward trend, trading volume must gradually decrease in order to have a chance of rebounding. However, after volume contraction, it may shrink even further. When is the bottom? Only when the volume shrinks and then increases can the bottom be confirmed. If the stock price is already above the 10 day moving average at this time, it is more certain that the upward trend has begun. So, basically, the perspective we should pay attention to is the increase in volume after volume contraction. Only the increase in volume reflects the change in the supply and demand relationship of the stock, and only the increase in trading volume may give the stock a bottom momentum to rise.
