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Old 11-11-2008, 11:35 AM
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David Waring David Waring is offline
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Hi Maajoba,

Glad to hear from you.

Below is a lesson which covers how volume should follow trend:

Technical Analysis Lesson 3 - The Last 3 Tenets of Dow Theory

You are correct that for every buyer there has to be a seller which is why rising volume by itself does not tell you anything, but when combined with trend analysis can be valuable.

When the market is in an uptrend this indicates that at lower prices there were more people seeking to buy than sell so the market had to rise in order to offset the imbalance between buyers and sellers.

Conversely when the market is in a downtrend this indicates that at higher prices there were more people looking to sell than buy so prices had to fall in order to offset the imbalance between sellers and buyers.

When these two scenarios are accompanies by rising volume this means that there is a lot of participation in the move which generally means that it has a greater chance of continuing than it otherwise would have.

Let me know if that is not what you are looking for.

Best Regards,
Dave
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