Types of market volume analysis:
- Technical analysis.
- Volume Spread Analysis (VSA).
- Cluster analysis.
- Order flow analysis.
- Market profile.
Let’s consider each of them in detail.
Technical analysis is one of the oldest and most famous variants of working with information from exchanges.
Technical analysis helps traders to confirm the price movement strength or weakness with the help of indicators and oscillators. If the volumes grow proportionally, it means that major players (so-called managed money) stay behind price movements.
If the volumes decrease, it means that participants are not interested in these price levels. The volume growth, as a rule, confirms the current trend. The price decrease or increase, along with the volume reduction, warns about a possible reversal, since traders are not interested in this movement.
Moving averages could be applied to the volume chart in ATAS in order to assess whether the volume indicator is above or below the average.
To do it, you need to select the volume rather than price in the settings as the source. Then, a line will appear in the volume chart as it is shown in our example in the 15 minute RTS RIH1 index futures chart (see the picture below).
Traders should pay attention to high volumes at that trading session time, when, usually, there is no activity – for example, at noon. See Picture 2.