Quantity is without doubt one of the easiest indicators in Technical Evaluation however when used correctly additionally it is one of the highly effective confirmatory indicators on the market. It’s all of the extra necessary within the present market. On this thread, we’ll take an in depth take a look at quantity with examples.
Quantity is the whole no of shares which are purchased/offered. Large quantity could be related to accumulation/distribution by FIIs, whereas small quantity could be related to retail buyers. When Worth Motion is mixed with quantity, you get some fascinating Worth Quantity patterns.
If Worth goes up with rising quantity, that’s an indication that huge guys are accumulating, therefore, a Bullish signal. When Worth goes down with declining quantity, that’s an indication that the small retail buyers are exiting. Nothing to fret, once more a Bullish signal.
Equally, if Worth goes down with rising quantity, that’s an indication that huge guys are exiting the inventory, therefore, a Bearish signal. When Worth goes up with declining quantity, that’s an indication that the small retail buyers are getting into. Not an excellent signal in case you are holding the inventory.
Worth Quantity Patterns can’t be so good in fact, so in actuality what you get is one thing as under. Right here, shifting common generally is a 50-SMA on Quantity. Therefore, e.g., Worth going up on above common quantity is Bullish and Worth happening on above common quantity is Bearish.
Now let’s take a look at some current examples. UCOBANK had each the bullish patterns, and is up 80% from its breakout level of 13.8. The primary one when breaking out indicated a really sturdy breakout, 2nd one whereas correcting on low quantity confirmed the sturdy bullish pattern.
Lastly, a bearish sample. I really like to make use of PayTM , however primarily based on the worth motion in final 2 weeks, I wouldn’t even contact the inventory with a 10-foot pole.It’s down huge on heavy promoting from very sturdy help at 510, and might be going to take weeks if not months to recuperate!
In PayTM ‘s case above, we are able to see that the promoting is occurring on heavy Supply Quantity additionally (which excludes intraday quantity). It’s good to make use of it in liu of simply Quantity, in case you might be utilizing Each day timeframes and better.
Lastly, we contemplate Quantity to be so necessary in Technicals, that now we have one other indicator in @investarindia, Vol%, which provides the Quantity as a % of Common Quantity. e.g. within the Auto-Resistance breakout scan under, HARIOMPIPE broke out on 7.26x common quantity (1322/182).
If you wish to study extra in-depth about easy methods to use quantity, see this Youtube video: