Hello fellow Traders,
welcome to my first Educational Idea!
As we know, Tesla had an insane Bullrun in the past Months (more then 10x) and is still rather holding strong up here.
Since arround 1 Year there is shrinking Volume, which hints to that one Side (either Sellers or Buyers) is loosing Interest.
So i chose Tesla as a nice Example for my first Educational Tutorial on Tradingview for Volume Analysis as its one of my favorite Indicators when Trading.
Basically low Volume means incoming Volatility - The Idea behind this is that you need relatively little money to move the Prices. (Will post good Examples below, so you get what i mean)
After some time everybody took their position. Most People who wanted to Sell did and most People who wanted to Buy did so too. So only few People left Trading a stock, which then shows in low Volume.
Exactly this is the case with Tesla currently, everybody took their Position and it has super low Volume currently.
One Side is out of breath, question now is which one. Buyers or Sellers?
Most People know that for a "healthy" uptrend there has to be rising Volume when price is rising. When these 2 diverge its a Hint for a possible incoming Correction/Reversal.
Note that the (potential) Correction from the Volume/Price Divergence can come really late as in the example of Tesla: over one Year!
So dont get in panic as soon you see price/vol divergence as it can take really long for it to matter.
Falling Volume in an uptrend doesnt neccessarily mean theres going to be a correction from my experience, it just means that theres going to be volatility. But after 10x as in this case its just way more likely that this volatility will be downwards, instead of upwards as Tesla is already that expensive.
Side Notes:
- Look at the biggest Exchanges when Analysing Volume as the small one´s could be noisy.
- The longer the Divergence exists the more likely becomes the incoming Volatility.
I only took Tesla as a example, this isnt about the Trading Idea shown above, its about the Education.
I will show some Examples on this "Pattern" and the Idea behind it below, take a look at it and even backtest it yourself on other Charts!
Have a nice Day!
welcome to my first Educational Idea!
As we know, Tesla had an insane Bullrun in the past Months (more then 10x) and is still rather holding strong up here.
Since arround 1 Year there is shrinking Volume, which hints to that one Side (either Sellers or Buyers) is loosing Interest.
So i chose Tesla as a nice Example for my first Educational Tutorial on Tradingview for Volume Analysis as its one of my favorite Indicators when Trading.
Basically low Volume means incoming Volatility - The Idea behind this is that you need relatively little money to move the Prices. (Will post good Examples below, so you get what i mean)
After some time everybody took their position. Most People who wanted to Sell did and most People who wanted to Buy did so too. So only few People left Trading a stock, which then shows in low Volume.
Exactly this is the case with Tesla currently, everybody took their Position and it has super low Volume currently.
One Side is out of breath, question now is which one. Buyers or Sellers?
Most People know that for a "healthy" uptrend there has to be rising Volume when price is rising. When these 2 diverge its a Hint for a possible incoming Correction/Reversal.
Note that the (potential) Correction from the Volume/Price Divergence can come really late as in the example of Tesla: over one Year!
So dont get in panic as soon you see price/vol divergence as it can take really long for it to matter.
Falling Volume in an uptrend doesnt neccessarily mean theres going to be a correction from my experience, it just means that theres going to be volatility. But after 10x as in this case its just way more likely that this volatility will be downwards, instead of upwards as Tesla is already that expensive.
Side Notes:
- Look at the biggest Exchanges when Analysing Volume as the small one´s could be noisy.
- The longer the Divergence exists the more likely becomes the incoming Volatility.
I only took Tesla as a example, this isnt about the Trading Idea shown above, its about the Education.
I will show some Examples on this "Pattern" and the Idea behind it below, take a look at it and even backtest it yourself on other Charts!
Have a nice Day!
Comment:
Also: The longer the Falling volume period, the bigger the breakout from my experience
Bitcoin is my favorite example on this Volume Pattern, everytime Volume was locally the lowest there was a breakout incoming very soon.