Volume Confirmation

Why volume is the fuel behind breakouts, how to measure it with relative volume, and what quiet volume inside a base tells you.

Volume shows conviction

Volume is the number of shares traded in a period. On a chart, it usually appears as bars along the bottom. Price tells you what happened; volume tells you how many participants cared. A breakout on heavy volume suggests big buyers, often institutions like mutual funds and pension funds, are stepping in. A breakout on light volume suggests very few are, and it is more likely to fizzle.

The breakout day’s volume towers over the prior bars — that is the footprint of demand.

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