Positive volume balance

Positive volume balance is a sign of health. It shows that the stock price is rising on high volume and reacting back on low volume. This indicates that investors are worried about not getting into the stock when something happens, and also hesitant to sell on falling prices.

Volume balance is a very important indicator. It is often used alongside trend analysis and other indicators based on the stock price.

The following applies to positive volume balance:

• Strengthens a buy signal
• Weakens a sell signal
• Indicates that investors are positive and rising prices will continue
• Indicates the end of falling prices and a trend reversal upwards

In general we want the stocks we own or plan to buy to have positive volume balance. Positive volume balance indicates a healthy stock with positive development of the investors’ view of the stock. Such a stock is indicated to rise further.