Volume Analysis: Reading Volume Alongside Price

Volume is simply a count of how many units (shares, contracts, or lots, depending on the market) changed hands over a given period. On its own it's just a number, but read alongside price it adds a layer of confirmation that price movement by itself doesn't provide -- the same size price move can mean very different things depending on how much volume accompanied it.

A price breakout above resistance on unusually high volume suggests real participation behind the move -- many market participants agreeing on the new direction -- and is generally considered more likely to hold. The same breakout on unusually low volume is treated with more suspicion, since it may reflect a lack of real conviction and can be more prone to failing and reversing back through the level it just broke.

Volume is also used to judge trends: a healthy uptrend is often accompanied by higher volume on up-moves and lower volume on the pullbacks in between, showing that buyers are more committed than sellers at each stage. When that pattern breaks down -- up-moves happening on shrinking volume -- it can be an early sign the trend is losing the participation that was driving it, even while price is still technically making new highs.

One practical limitation: reliable, complete volume data is easy to get for centrally-traded instruments like stocks and futures, but forex trading happens across many decentralized venues, so retail forex platforms typically show broker-specific "tick volume" (a count of price changes) rather than true traded volume -- still useful for relative comparison, but not a literal count of currency traded globally.