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V.7:8 (246-248): Financial Volume Index by Patrick Cifaldi
V.7:8 (246-248): Financial Volume Index by Patrick Cifaldi
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Financial Volume Index
by Patrick Cifaldi
In 1979, the analysis of trading volume was done mainly by hand. Joseph Granville was the foremost researcher and his books and friendship gave me the tools to start my work. The basic work was tedious and long, and left little time for experimentation. With the advent of personal computers, I finally had the time to research volume.
The foundation of volume analysis is that changes in the trend of volume precede changes in the trend in price. One analogy is that if volume is the tides of the sea, and price is a sailing ship, the ship must wait for the tides to start its journey.
Non-confirmation between price and a technical indicator is one of the basic methods of technical analysis. For example, should price break out to new highs and the indicator fail to make a new high, a sell signal would be in order. Conversely, if price makes a new low without the indicator verifying that low, a buy signal would be in order.
In 1979, the analysis of trading volume was done mainly by hand. Joseph Granville was the foremost researcher and his books and friendship gave me the tools to start my work. The basic work was tedious and long, and left little time for experimentation. With the advent of personal computers, I finally had the time to research volume.
The foundation of volume analysis is that changes in the trend of volume precede changes in the trend in price. One analogy is that if volume is the tides of the sea, and price is a sailing ship, the ship must wait for the tides to start its journey.
Non-confirmation between price and a technical indicator is one of the basic methods of technical analysis. For example, should price break out to new highs and the indicator fail to make a new high, a sell signal would be in order. Conversely, if price makes a new low without the indicator verifying that low, a buy signal would be in order.
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