Volumes, always volumes!

It is always painful for me, as a passionate technical analysis of financial markets, to find on some specialized sites very “complete” graphic studies, with a riot of lines in all directions, dispensable Bollinger bands, many oscillators and other colorful tools, but nothing on the most essential of them, after the representation in candles it is understood: transaction volumes!

Definition

Volumes, or trading volumes, simply represent the number of assets, shares for example, that have changed hands over a period of time. A glance at Crédit Agricole’s volumes, for example, shows a peak of 15,227,087 shares traded on the trading of Thursday 09 February, in the wake of the publication of its quarterly copy. That is to say the volumes higher by 64% than those observed the day before, a “lambda” session.

We will therefore speak of more or less important volumes, more or fed, depending on the sessions, weeks, months, etc. Not to be confused with the capital traded over a given period, which equals the multiplication of these volumes by the average price over the period, the session for example.

By its very nature, volumes are one of the pillars of liquidity measurement, i.e. the degree to which a trader can enter and exit a position in an asset. They are used to measure the degree of confrontation between sellers and buyers, and by the same token, give meaning by their dynamics, at graphic levels, which become, depending on the case, support or resistance.

It should be noted that an exceptional peak in volumes on a share that is not customary because of the fact must evoke a track: that of a “block”, that is to say the exchange between two shareholders of a mass of securities.

Keys Interpretation of volumes

They make it possible to give meaning to the crossing of a level previously defined as technical. If resistance has gradually established itself over time, blocking the path of prices, and a crossing by prices is suddenly made, a joint analysis of trading volumes is then essential: a sustained increase in the number of securities traded will “validate” the break, in the same way that a high participation rate gives “meaning” to an electoral victory, to take an image from another domain.

The example of convergences and divergences

Volumes can be used on crossings, threshold breaks, but also on momentums, and in their relative dynamics in relation to prices. Thus, an increase in volumes at the very heart of the expression of a bullish movement will be a sign of pursuit. Conversely, if volumes run out of steam at the top of the uptrend and high points are increasingly struggling to register on prices, profit taking can be envisaged. We will then speak of divergence between prices and volumes.

Alexandre TIXIER, for Fibee

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Le Fonds Tourisme Côte d’Azur accompagne le développement du groupe varois, Collection Rivages, au travers d’une émission obligataire de 3 M€

Le Fonds Tourisme Côte d’Azur accompagne le développement du groupe varois, Collection Rivages, au travers d’une émission obligataire de 3 M€

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