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5. Technical Analysis > What’s Volume Got to Do with It?

What’s Volume Got to Do with It?

Because most charts and indicators rely solely on price, trading volume can provide an independent confirmation or contradiction to the signals you see.

Indicators and chart patterns aren’t infallible. Their predictions don’t always come true. To increase the likelihood that you’re getting the right signals, most technical analysts look for confirmation before executing a trade. The problem is that most indicators rely on price, so each price-based indicator operates on the same price data and often confirms any other price-based indicator. What you need is an indicator that doesn’t rely on price—and that’s volume, which represents the number of shares traded during a period.

How Volume Confirms Price


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