![]() Research on price–volume relationships started in 1966 when Ying ( 1966) proved an asymmetric relationship between the absolute value of a daily price change and daily volume, which stated that strong volume increases are associated with either strong price decreases or increases. The volume–price dependency might change depending on the market investigated and the assets considered. Research within this scope does not confirm fully such a relationship. ![]() In contrast, during a downward trend, the volume should increase as prices decline and should decrease as growth increases. Technical analysts and traders expect that price changes are positively correlated with volume hence, the volume should increase during an upward trend and should decrease during a downward correction. The observations of the relationship between trading volume and asset prices have been focused on by many scientists during the last few decades. Volume–price dynamics are commonly used by investors who trade currencies, equities, and commodities on all types of markets-mature and developed-by speculators playing derivatives, such as futures or options, and by persons investing in bonds, among others. No increase in turnover when overcoming a significant price level might be an indicator for the false signals coming from the market, which might point out that smart money is attempting to distribute stocks at a low cost. ![]() The volume reveals when professional investors with huge portfolios buy and sell stocks. Volume analysis allows for understanding the source of the price change and confirms or negates a given trend direction and trend quality. ![]() Weinstein ( 1988) wrote: Never trust a breakout that isn’t accompanied by a significant increase in volume. One of the most widely used and analyzed dimensions is the relationship between price and volume. Efficient investments in and effective navigation of financial markets require knowledge of not only various types of assets but also an understanding of the relationships among many dimensions, such as price, volume, volatility, risk, and others. ![]()
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