What is Bullish & Bearish Volume?

So what exactly is bullish and bearish volume? In a previous post I spoke about the truth about stock volume and I spoke about how volume works and why the professionals don’t want you to have access to this data. In this post I will be explaining what is bullish and bearish volume.

Bullish volume is increasing volume on up-moves and decreasing volume on down-moves. Bearish volume is increasing volume on down-moves and decreasing volume on up-moves. Only knowing these two statements is not enough. You need to look at the price spread and the price action in relation to the volume. Technical analysis tools look at the right edge of the chart and they smooth out all the noisy data. Doing this hides the true relationship volume and the price action, rather than highlight it.

TradeGuider Software Calculates the Volume Activity for you.

The TradeGuider software’s volume activity is automatically calculated and shown as a separate indicator called the volume themometer. The thermometer will highlight for you if the volume is bullish, expanding volume on up bars and bearish volume is decreasing volume on down bars.

The art of reading the market is to have an overall view and not to concentrate on the individual bars. During the distribution phase, the smart money want to entice you to go long into a poorly conceived trade and the types of bars that usally occur but not always are upthrusts or low volume up bars. These bars mean very little on their own, but once you take the background into consideration, these signs become very significant signs of weakness and could be an ideal place to take a short trade.

FIVN chart showing strength in the bsackground barh ultra-high volume on a down var
Strength in the background

You must remember that near background indications are just as important as the most recent bars.

Todays pricing action heavily influenced by what has happened in the background strength or weakness, rather than what is occuring today. That is why market news does not have a long term effect on the markets. If a market is being artificially marked up, this is due to the weakness in the background. If prices are artificially marked down this is due to strength in the background.