Volume changes reveal important clues about market trends
Trading volume is an important indicator of market sentiment and trend changes. Its fluctuations often provide key clues about future market trends. The shrinkage or enlargement of trading volume can reflect changes in the confidence of market participants and the potential trend of the market. Specifically, changes in trading volume can be divided into the following situations:
Market pessimism: When most investors are pessimistic about the market prospects and choose to sell without anyone taking their orders, trading volume will shrink sharply. This usually indicates low market sentiment and a lack of investor confidence in the future.
Market optimism: On the contrary, if the market is generally optimistic and investors are actively buying, but there is no supply of selling orders, it will also lead to a sharp reduction in trading volume. This suggests that while the market is full of optimism, there may also be some degree of wait-and-see.
When volume is high, it usually means the market is experiencing a trend turn. At this time, there are significant differences between buyers and sellers in their expectations of future market trends, and market transactions become active. In this case, investors should pay close attention to the next fluctuations in the market, analyze which force may be dominant, and follow the trend.