22 January 2012

PRICE & VOLUME ANALYSIS

Hi Friends,


Well when everyone is busy in guessing the bottom. I spent some time to do Price & Volume Analysis.


In an uptrend or Bullish Trend Price & Volume has positive correlation. i.e. Volumes expand when prices rise and contract when prices fall.


While in a down trend or Bearish Trend Price & Volume has negative correlation . i.e. Volumes expand when prices fall and contract when prices rise.


Now lets look at these charts:-
PRICE & VOLUME 2008
From this 2008 chart we can clearly see that in late 2007 when trend was up price & volume were in positive correlation. But when the trend turned down volumes expanded on down move & contracted on pull back rallies. But after the final drop in OCT 2008 price & volume again showed positive correlation.


PRICE & VOLUME AT BOTTOM 2009
From the above chart we can see that how price and volume showed positive correlation after the final drop in OCT 2008. We can clearly see volumes expanding on rise and contracting o fall.


PRICE & VOLUME  2011


Now in this chart of 2011 downtrend we can see how price & volume are in negative correlation. We can also see how Nifty is moving in channel & after breaking the channel it giving a Sharpe move in opposite direction. we have still not witnessed any positive correlation in Price & Volume. So we cannot say Nifty has Bottomed Out. 


Well & as we can see Nifty Moving in Channel. The break from this upward rising channel will lead to Sharpe down move.




Happy Minting,


Thanks & Regards,


Harsh Dixit.