It is believed that in a bull market:
- the price rises on increasing volumes;
- the price falls on decreasing volumes.
The opposite is true for a bear market:
- the price falls on increasing volumes;
- the price rises on decreasing volumes.
However, it is important to note that high volumes usually appear during market reversals. In this case, the previous rules work, but if the price rises on excessively high volumes (twice the average), this may be a sign of the culmination of a growing trend. If the price falls on excessively high volumes, this can be a panic and a sign of the culmination of a downtrend.
A simple example. Let’s take a closer look at the chart below — the daily period, the S&P 500 futures market, August 2023.