[satucker]

Ok Dave-

I hope this is a good question. With most of the candlestick patterns we are supposed to look for an increase in volume? Can you quantify that a little better? Should the volume on the candle formation be twice as much as the day before...or 50% greater than the average of the last 5 days?? Does this make sense...what does an increase mean...it is very subjective?
scott

[David Waring]

Hey Scott,

Yes that is a good question and yes it is very subjective. I don't think you can put a number on it but remember that each variable that you use to trade is one factor in forming an opinion. So with this in mind what I would say is the greater the volume on the breakout the more likely it is that it is going to be a legit breakout. With this in mind I would say look at the historical volume of the security to make your determination as to what a big number would be.

Any other thoughts on this one?

Dave

I would agree with Dave... basically if you are looking at a reversal down for example: the days when the stock is rising up, it should show a weakness in volume i.e. show volume decreasing on the up days.... then if we have a nice spike in volume on the down day, then that would confirm a strong chance of that reversal.

For a continuation pattern, a break of support or resistance would be one thing and a good spike in volume would indicate that pressure is on the stock to continue in its direction...

Basically, if you are thinking of going long, you want to see less volume of the days when the stock dropped and greater spikes in volume on the up days. And if you are thinking of going short, you want to see less volume on the days ups and more volume on the days down. But using other indicators can help confirm.

hope that helps :-)

David

[David Waring]

Well put David thanks for the comment.


Dave