Volume and breakout:
Volume is an important indicator in breakouts above resistance
levels (or breakouts below support levels). Volume often spikes
sharply when a breakout occurs.
A surge in volume often precedes a price breakout, then the
breakout point through the area of resistance becomes a level
of support a few days later. A decline in volume during down
days is often a sign that the sell off is only a temporary
setback in a generally upward trend.
There is a tendency for round numbers to stop advances or declines,
at least in the short term. These round numbers, such as 50, 80, 100
will often act as psychological support or resistance levels. A trader
can use this information to his or her advantage and begin taking profits,
or enter the market, when round numbers are approached. to be continued...
Tip 2
The market told me to do it....
Often it is safer to let the market tell you if it is okay to buy
into something. If we rally, make a fast profit and take it. But
if we are weak, sit it out and watch for a while.
Tip 3
It can be very powerful...
Sometimes you will see a stock consolidating in a "cone pattern"
where you see lower highs and higher lows, basically compressing
it smaller and smaller. Often on patterns like this, when the break
out comes (in either direction but more times than not its up) it
is very powerful.
Subscribe to the Stocks2Watch Newsletter now to receive tips, tricks
and techniques for trading.
Just send a blank email to:
stocks2watch@sendfree.com
Linear Mode
