📍 Core Concept

Volume Basics

Understanding volume and its role in confirming price action.

APOLLO ENCYCLOPEDIA

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What It Is

Volume is the total number of units traded during a given period. It's the single most important confirmation tool in technical analysis because it reveals the level of commitment behind price movements.

Key insight: Price tells you what happened. Volume tells you whether it mattered. A breakout on massive volume is conviction. A breakout on thin volume is a trap. Every price pattern, every support/resistance level, every trend — volume either confirms or denies its validity.

In crypto, volume data comes from exchanges and should be interpreted relatively (compared to the asset's average) rather than absolutely. What matters is whether volume is increasing or decreasing relative to recent activity.

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Volume Rules

Volume confirms trends.

Rising price + rising volume = healthy uptrend. Rising price + declining volume = warning sign. Falling price + rising volume = selling pressure. Falling price + declining volume = selling exhaustion.

Volume precedes price.

Often, volume will spike before a major price move begins. Watch for unusual volume at key levels — it often signals institutional positioning before the breakout.

Use volume as a filter, not a signal.

Volume alone doesn't tell you direction. But it tells you whether a directional signal (pattern, breakout, indicator) should be trusted. No volume confirmation = no trade.

💡Pro Tip

Apply this concept in combination with others. No single concept tells the whole story - confluence is key.

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