With today's post I wanted to share with you all some elementary methods and techniques that are applied when performing technical analysis, namely the movements of price action or a particular market, and then using that data to create charts that serve to evaluate and extrapolate trends in the financial markets.
Basically, technical analysis is based on the statistical values that the price action develops when creating trends, i.e. it is based on a balance between supply and demand, in this sense I must point out that one of the key statistical indicators within technical analysis is volume.
It should be emphasised that volume is one of the oldest and most reliable trading indicators used when trading the financial markets, and I would even go so far as to say that the volume indicator is the most popular indicator in the trading world, considering that any trading portal, platform, or broker may not have a specific indicator, however, in my particular case I have yet to meet a platform that does not have a volume indicator.
From a theoretical construct, volume is understood as a measure of the amount of a given asset or financial instrument that has been traded in a given period of time, hence it is used as a technical indicator, as it serves to project the strength of the price action.
This projection determines the strength of the volume both on bounces and on specific pullbacks within a given time frame, therefore, the volume indicator guides us on the strength or weakness of a movement, an element that allows us to deduce whether there is buying pressure or selling pressure.
SOURCES CONSULTED
Zurich S Technical Analysis - Explained. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating the public domain image background: Magnimetrics
