When price is moving, the move’s continuation is confirmed by volume. An upward price move accompanied by strong buying volume and buying imbalances provides reassurance and confirmation as to the strength of the move. Conversely, if we have reducing volume as a move progresses, it may be a sign that the move may be coming to an end and will pause or reverse.
Also important is identifying what is not happening. If we do not see reducing volume in buying as price rises (or selling as price falls) then by implication, the move has not yet reached the extreme and has the possibility to continue. This can be visualised with this indicator’s Demand Continuation and Supply Continuation subgraphs.
The Reducing Volume indicator analyses the traded volume at the extremes of the price bar and indicates whether volume is reducing at the extreme of the price bar, highlighting divergence between price and volume.
This indicator is particularly powerful when read within the context of significant daily price levels such as daily high/low and the initial balance. Also, when in a position with a defined exit point, the Demand and Supply Continuation visualisations can increase trader confidence in their trading decision.
The emoji trading Order Flow Suite Price Rejector indicator uses Reducing Volume as a factor within its calculations.
Reducing Volume may be licensed for Sierra Chart on a Lifetime, 1-month or 3-month basis, or as part of the complete Emoji Trading Order Flow Suite. Licences include all indicator updates and enhancements during the license period.