Volume Analysis With The SPY by Domenico D’Errico
I Spy With My Little Charts…
When something is trading at or close to its all-time highs, you need to know whether to sell it or continue holding it. Viewing the markets in terms of supply & demand areas is one way to do it.
Volume analysis is a form of technical analysis that attempts to look at price action and how it relates to volume. It is similar to Market Profile in that it identifies the price level at which sup-ply & demand are in equilibrium and where it is in imbalance. In this article, I will use the concept of volume analysis to identify relevant supply & demand areas on a chart and use them as my entry or exit points.
As you can see in Figure 1, there are three different types of volume area. These are based on volume traded. In addition, the shape of the point of control (POC) can provide traders with additional information (Figure 2).