Forex Volume Indicator

What is a Forex Volume Indicator?

In Technical Analysis, the Volume Indicator is a tool that reflects traders’ activities within a specific time frame.

How Does a Volume Indicator Work?

The volume indicator and Price Analysis is usually used hand-in-hand. The pair confirms a trend’s strength or weakness and ultimately determines potential reversals.

Confirming a Trend

The Bullish sentiment is confirmed through an increase in trading volumes amid an uptrend.

A Bearish sentiment, on the other hand, is confirmed through growth in trading volumes with a downtrend.

Weakness in a Trend

Worthy of note, a sign of weakness in the downtrend may be seen through the fall of volumes and the rise in prices. This is the case as asset demand may, but not necessarily always, correspond to increase in prices.

Calculation of Forex Volume

Volume can be computed through the formula:

Volume = total value / number of transactions for a given period.