Apply moving averages forex indicator into the volumes histogram. You can use default period 14 of EMA. Single bar in volumes histogram holds less value than a developement over a couple of bars. We will look for trends – growing (above average) or decreasing volume (below average) and volume extremes.
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High, or growing volume confirms the trend. If price reaches new high/low (local extreme) and it is accompanied by extreme volume, it is more than likely that price will test this new price level in the future.
Trend continuing on low or decreasing volume can be considered weak. Price may begin to range before reversal. Trend may also continue after ranging period, based on fundamental news that will allow influx of new traders supporting previous trend.
Looking for weakness in volume, can be applied when we wish to enter on the price correction. Corrections against the trend on low volume are great entry opportunities. Find weakness in corection for impeccapble timing of your positions in forex.
Always consider volumes together with candles
Compare effort vs. result. Effort is activity that is measured by volumes forex indicator. Results of effort are clearly visible on the chart as price candles (bars).
Wide full bodies of candle in the direction of the trend signalize very little selling into the uptrend and therefore its health and strength.
In other hand narrow candles with extreme volume may signalize trend reversal, as the activity included increased countertrend activity.
To read volumes correctly, is the skill hard to master, but once mastered rewards are substantial.