Page 104 - A Complete Guide to Volume Price Analysis: Read the book then read the market

Equally, if you are long the market the same applies. In an up trend the market will pull back against you. If the volume is falling on these pull backs
then you KNOW this is simply a minor reversal lower and not a change in trend, particularly if you have seen no topping out volume.

Finally as we can see on the right hand side of the chart, stopping volume finally appeared, with the market moving into a congestion phase with the
selling pressure dropping away to below average. The pair completed this phase of its journey and we exit.

Our entry, our management, and exit of this position have all been executed using one simple tool. VPA. Nothing else. Why more traders,
speculators and investors don't pay attention to volume is beyond me, but there we are.

Here are some further examples from the world of spot forex.

Fig 10.17 AUD/USD – Weekly Spot Forex Chart : Selling Climax

The reason I’ve chosen the weekly chart for the AUD/USD is that not only is it a good example of a selling climax, it also gives us a perspective on
how long this may last. As I have said several times in this book, we have to be patient. Major changes in trend take time to come into effect, and
this is an example. It also shows that VPA works in all time frames.

Remember, here we are looking at a period of around 18 months, so long term trends with big profits to be made if you are patient, and believe in
the power of VPA of course!

As we can see from the chart the AUD/USD pair has been bullish, before moving into a cong cg i>

The move higher extends over several months, but the point to note here, is the slow steady fall in volume over this period. It's not dramatic, just a
steady fall, and then as we enter the yellow box on the chart – what do we see? Two wide bars, one after the other, but look at the volume. It has
fallen away to almost nothing. This is a HUGE warning signal that this pair is becoming exhausted, and either running out of steam, or there is some
alternative explanation. What is clear, is that the market makers are moving prices higher with NO volume, and have withdrawn from the market.

Traders who have missed this long trend higher, are now jumping in on fear and greed. They fear missing out on a golden opportunity. After all, they
have watched this market go up and up, and have finally caved in and bought, just when the market makers are leaving by the side door.

Then the selling climax begins. The market makers are selling in huge volumes at this level, before finally after several weeks the pair break lower,
and attempts to rally giving us signs of further weakness, before breaking lower again.

Note the attempt to rally at the right hand edge of the chart. Here we see narrow spread up candles on very high volume, and falling, another very
strong signal of further weakness to come, which duly arrives.

One point I do want to cover here in a little more detail is the whole issue of rising and falling volumes when associated with trends, because we do
have to apply some flexibility to any analysis and interpretation here. After all, if the market moved higher for ten consecutive bars, and you wanted
to apply the volume principle to the letter of the law, then you would have to see 10 volume bars each higher than the last. Clearly this would place a
limit on how far any trend could go, since it is unreasonable to expect volumes to go up and up and up for ever!