Volume Explained: How Volume validates Stock Price

I want to share with you a couple key elements of technical analysis that every investor should know.

Have you heard the old saying that “Volume Equals Validity?” With volume analysis, you can anticipate changes in a stock’s price. Big volume tends to precede major price movements, whether up or down. You can also use volume trends to CONFIRM what a stock’s price might be telling us. If a stock’s trend is accompanied by consistently increasing volume, that trend is likely to continue. If that trend is not accompanied by increasing volume, it’s weak and likely to end soon. We consider a move in a stock or even an index to be valid when there’s heavy volume, or force, behind it.

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Chris is a rules-based investor that relies on technical analysis and relative strength investing models to make winning calls. He is the Chief Investment Officer at Rowe Wealth Management and CEO and Founder at True Market Insiders.

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Video Chapters

0:00 Intro
1:34 “Volume=Validity”
2:15 Two Reasons to Track Volume
4:26 Warren Buffet Buys OXY
6:44 Price Chart Volume Indicator
8:06 Validating Stock Price
10:19 Pull backs Inside Uptrends
12:13 How Brokerage Firms Trade Stocks
15:03 Breaking Resistance Levels
17:39 Support for New Stock Prices
18:15 Buying Stock on Margin
19:25 Volume Validates Chart Patterns
20:00 Doji Candlestick Reversal Pattern
20:27 Outro

All content should not be considered a recommendation to buy or sell any security. All information is intended for educational purposes only and in no way should be considered investment advice.

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