Page 66 - A Complete Guide to Volume Price Analysis: Read the book then read the market

volume. If this is the case, then we know the markets have validated the news and the insiders and big money are joining in. We might see a wide
spread up candle, with high volume. The news has been validated and confirmed by the price action and associated volume.

I would urge you to study volume whenever news is released, as it is one of the quickest ways to learn the basics of VPA. Here you will see it at
work. Surges in volume accompanying large price moves, large price moves on low volume, and trap moves, such as low volume on a long legged
doji. It will all be there for you. However, the key point is this. When news is released, it is often the first place where we see volume surges in the
market, and they are excellent places to start our analysis. If the volume surge has validated the price move, then we can be sure that the insiders
are joining in the move higher or lower. If the price action has moved on the news, but has NOT been validated by supportive volumes, then it is an
anomaly and other forces are at work. This is telling us to be cautious.

Volume and the news should go hand in hand. After all, the markets generally react to the major news releases which occur throughout the trading
day, and this is the easiest, quickest and simplest way, to begin to read the market, and also gain a perspective on what is low, medium, high or
ultra high volume, for all the various instruments and markets you may be trading.

A long legged doji candle, should always be validated by a minimum of average volume, and preferabl Candp hy high or ultra high. If it is low, then it
is an anomaly and therefore a trap set by the insiders.

Those then are our trio of 'premier candles' that we watch for in all time frames. They are our cue to pay attention and start our VPA analysis. If we
are not in a position, we are looking for confirmation of an entry, and if we are already in the market, we are looking for signals either to stay in, or
exit.

Now let's move on to some of the other key individual candles, and then on to consider some candle patterns.

Wide Spread Candles

Fig 6.14 Wide Spread
Candle

Price action – strong market sentiment

The price action of the wide spread candle is sending a clear signal with only ONE message. Sentiment for the session is strong. It is either
strongly bullish or strongly bearish, but the word is STRONG. The price action has risen sharply higher or lower in the session and closed at or near
the high of an up candle, or at or near the low of a down candle. The associated volume should therefore reflect this strong sentiment with 'strong'
volume.

As we can see in the example in Fig 6.14, if the volume is above average, then this is what we should expect to see as it validates the price. The