The level of the volume measures the urgency behind the price move. So the heavier the volume, the higher the intensity or pressure. Watching the volume gives the trader more insight into the pressure behind market moves. The trader uses what he interprets to either confirm price movement or decide that a price move cannot be trusted.

The more concise rule for interpreting volume in all markets is volume should increase or expand in the direction of the existing price trend. As example, in an uptrend volume should be heavier as the price moves higher, and should decrease when the price dips. As this pattern continues, volume is confirming the price trend in stock trading. Below is an example of how this might look on a graph.

The trader watches for divergence, which would occur if the penetration of a previous high by the price trend takes place on declining volume. This actions flags diminishing buying pressure. When the divergence is followed by a tendency for the volume to pick up on price dips, our trader should be suspect that the uptrend is headed into trouble. See the rough example below.

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.