How to read the high and low after the volume? This is how the main force intends to judge!

High volume in crypto trading signals strong market interest, while analyzing price action after volume shifts helps traders anticipate trends and institutional moves.

Jun 11, 2025 at 10:08 pm

Understanding Volume in Cryptocurrency Trading

In the world of cryptocurrency trading, volume plays a critical role in determining the strength and validity of price movements. Volume refers to the total number of assets traded during a specific period, typically 24 hours. It helps traders assess the level of interest or participation from market participants. High volume usually signals strong interest, while low volume might indicate indecision or lack of conviction.

When analyzing volume, it's essential to understand how it interacts with price action. A rising price accompanied by increasing volume is generally considered a healthy sign, indicating strong buying pressure. Conversely, if the price rises but volume remains flat or declines, it may suggest that the move lacks support and could be short-lived.

What Does "High and Low After the Volume" Mean?

The phrase "high and low after the volume" often refers to observing how price behaves after a significant volume spike or drop. This concept is used by experienced traders to determine whether the current trend is likely to continue or reverse. When volume surges and is followed by a sharp price movement, it can indicate that major players — often referred to as the "main force" — are entering or exiting positions.

Traders look for patterns such as:

• A sudden increase in volume followed by a price breakout
• A sharp drop in volume after a rally, suggesting profit-taking
• Volume spikes at key support or resistance levels

By carefully monitoring these patterns, traders can gain insights into potential future price movements and align their strategies accordingly.

How Institutional Traders Use Volume to Gauge Intent

Institutional investors and large trading entities — the so-called "main force" — often leave footprints in volume data. These players cannot enter or exit large positions without affecting the market significantly. Their actions are reflected through volume anomalies that retail traders can analyze.

For example:

• Sudden volume spikes without corresponding price movement may suggest accumulation or distribution
• Consistent high volume during sideways consolidation can imply that big players are building or reducing positions
• Volume collapsing during a downtrend may signal that selling pressure is subsiding

These observations help traders anticipate where the real power lies in the market and whether a reversal or continuation is more likely.

Technical Tools to Analyze Volume and Price Interaction

To effectively interpret the relationship between volume and price, traders use various technical tools:

• On-Balance Volume (OBV): This indicator adds volume on up days and subtracts it on down days to show buying and selling pressure over time.
• Volume Moving Averages: Comparing current volume to its moving average helps identify abnormal activity.
• Volume Profile: Displays the amount of trading activity at specific price levels, helping traders find areas of value and institutional interest.
• Candlestick Charts with Volume Bars: Overlaying volume beneath candlesticks provides a visual representation of how much activity occurred during each price bar.

Using these tools together allows traders to form a comprehensive view of market sentiment and possible upcoming moves.

Reading Price Action After Significant Volume Shifts

Once a notable volume shift occurs, the next step is to observe how the price reacts. Here’s what to look for:

• After a high-volume bullish candle: If the following candles maintain above the previous candle’s close and hold support, it suggests strength. However, if the price fails to hold and reverses sharply, it could mean that the initial move was a trap.
• After a high-volume bearish candle: Continued downward movement with sustained volume supports a bearish outlook. If the price stabilizes or rebounds quickly, the initial selloff may have been exaggerated.
• After a low-volume period: Consolidation with shrinking volume often precedes a breakout. The direction of the breakout depends on which side absorbs the order flow first.

Each of these scenarios gives clues about the intentions of the main force and whether they are pushing the price higher or lower.

Common Misinterpretations of Volume Patterns

Many traders fall into the trap of misreading volume patterns. One common mistake is assuming that a single volume spike always signals a strong trend. In reality, volume must be analyzed in context with price structure and market conditions.

Other pitfalls include:

• Ignoring timeframes: A volume surge on a 1-hour chart may not carry the same weight as one on the daily chart.
• Overreacting to isolated spikes: Not every volume anomaly indicates institutional activity; sometimes it's just noise.
• Failing to consider liquidity: High volume in an illiquid market can create misleading signals.

Avoiding these errors requires discipline and a structured approach to interpreting volume alongside other confirming indicators.

---

Frequently Asked Questions

Q: Can volume alone predict price movements accurately?

A: No single metric can guarantee accurate predictions. While volume provides valuable insights, it should always be used in conjunction with price action, trend analysis, and other technical indicators for better accuracy.

Q: How do I differentiate between retail and institutional volume?

A: Institutional volume tends to appear as consistent, large blocks of trades rather than erratic, smaller ones typical of retail traders. Tools like volume profile and order book analysis can help distinguish between the two.

Q: What does it mean when volume increases but the price doesn’t move?

A: This situation often indicates a tug-of-war between buyers and sellers. It may signal either a buildup before a breakout or a temporary stalemate where neither side has enough control to push the price decisively.

Q: Should I always follow volume spikes blindly?

A: Absolutely not. Blindly following volume spikes can lead to false signals. Always wait for confirmation through price behavior and consider the broader context of the market before making decisions.