NOVICE TRADER

The Market Facilitation Index

by Thom Hartle

Volume, one of the key elements in technical analysis, is used to analyze the power behind a trend. Heavy volume days may indicate a strong trend, while light volume days could indicate the lack of a trend. Here's a method to connect volume and price movement to quantify price activity.

FIGURE 2: T-BONDS. Each bar is color-coded. Red stands for a squat bar, green for a
green bar, blue for a fade bar and gray for a fake bar.
"We can say that trends are driven by orders coming from off the floor. And before a trend can start, first there must be an increase in volume. "
Excerpted from an article originally published in the August 1996 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved.
© Copyright 1996, Technical Analysis, Inc.
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