Online Trading Concepts


Volume Spikes & Blowoffs


  1. Volume Defined
  2. Volume Spikes & Blow-offs

Extreme increases in volume along with extreme rises or falls in price can sometimes be interpeted opposite to regular volume analysis:

The chart below of eBay (EBAY) stock illustrates a volume spike, defined as at least two times the average volume:

volume buying exhaustion

Volume extremes may occur at bottoms as well, which is shown below in the chart of the Nasdaq 100 QQQQ's:

volume spikes may occur at bottoms

A strong understanding of volume is a good addition to price analysis skills. Being able to see when price increases or decreases have firm support or knowing when either buyers or sellers have been exhausted might prove useful when trading. Another way of visualizing volume is Volume Rate of Change (see: Volume Rate of Change) and the Volume Oscillator (see: Volume Oscillator).

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