Today we will talk about the relationship between price and trading volume.
When we see the situation of these three K-lines, the first thing I set here is green for rise and red for fall.
Obviously, the three K-lines in the picture above show a downward trend.
Through observation, we found that the body of the first K-line is smaller than that of the other K-lines, and the shadow is very long.
If we only look at the body of the K-line, we can only draw one conclusion - the decline is a process from light to heavy and then to light again.
However, the K-line is only the final price reaction and cannot judge the situation of a battle between bulls and bears. This is when trading volume appears.
The so-called trading volume is actually a consumption of manpower in the game between bulls and bears.
As shown in the above figure, the first trading volume corresponds to the long-short game situation of the first falling K-line. In the end, it is obvious that both sides invested a lot of manpower and the air force won in the end, so a very long upper shadow line appeared.
To further confirm the conjecture, the second K-line fell more than the first one and had only a weak upper shadow. And the consumption (volume) of the long-short game was smaller than that of the previous K-line. The air force won easily.
However, when it came to the third K-line, both the bulls and the bears invested more forces (trading volume) than the previous K-line, but although the air force won in the end, it was a miserable victory. Why?
Because the Air Force invested more manpower than the second K-line, but the results (real part) are less than the second K-line, the attack of the lower shadow line was resisted by the long army, so the lower shadow line is very long.
So it is more difficult for the Air Force to win.
And the fourth K-line also proves that this is indeed the case: the weakness of the Air Force began to show in the third K-line.
The same is true for the volume chart, where a very small amount of volume has a very large increase.
However, the subsequent trend showed a situation of weakness in the bulls.
And the trading volume is shrinking and rising.
The multi-army had few bullets left, so the air force did not engage in excessive entanglement but was gathering its strength.
As expected, the subsequent trend was also shown.
It can be seen that the downward trend shows a relatively large divergence in the second K-line, with shadows above and below, and then the real part is slightly reduced.
Then I will show you the trading volume below and let you guess the trend of the next K-line.
It is obvious that trading volume is increasing, but the decline has slowed down, which means that the short-term is showing signs of fatigue.
The next K-line is very likely to bring about a reversal.
As expected, this K-line shows an upward trend. Let's observe the trading volume.
It is obvious that the bulls and bears have consumed a lot of manpower (trading volume) in this K-line. Although the bulls have taken a lead, it can be seen from the upper and lower shadows that there is a big difference between its rise and fall. Although it rises in the end, it is difficult to determine the next K-line.
Without further ado, let me tell you one of my formulas for quantity and price.
Long position:
The volume is shrinking and the increase is large, and the bulls are strong;
The increase remains unchanged, and the bulls are strong;
The gains are reduced and the bulls are weak;
Large volume rises, look at the increase, the increase is large, and the bulls are strong;
The increase remains unchanged, and the bulls are weak;
The gains are reduced and the bulls are weak;
Flat volume rises, look at the increase, the increase is large, the bulls are strong;
The increase remains unchanged, and the bulls are strong;
The gains have shrunk and the bulls are weak.
Short position:
The volume is decreasing, the decline is expected, the decline is large, and the bears are strong;
The decline remains unchanged, and the short position is strong;
The decline is reduced and the short position is weak;
If the volume falls, the decline is expected, and if the decline is large, the bears are strong;
The decline remains unchanged, and the short position is weak;
The decline is reduced. Short positions are weak;
Flat volume decline, bullish decline, large decline, strong bearish trend;
The decline remains unchanged, and the short position is strong;
The decline has narrowed and the shorts are weak.
(The above decline and increase are based on the real part of the K-line, excluding the upper and lower shadows)
