https://profit.ly/content/premium/22898

 

Great insights into volume and why we need a FRD/consolidation on a stock that has had several green days in a green.

The way I understand it, volume is tied up buy longs who are buying the stock on the way up and then are waiting for some of "sell signal" in the form of a FRD or consolidation, indicating that the top may be in. This signal indicates that they may be getting out for max profits (at least at this price level).

Longs getting out frees up shares that were tied up as long as these longs were riding the stock up. This makes shares available to dip buyers on a FGD and for shorts who want to cover on a FGD or into bounces.

With the stock being down after one (or several) FRD but still holding levels, dip buyers may come in, looking for FGD and shorts may cover to take profits, both sources of demand to push the stock back up. On the FRD(s) stock has also created range to bounce into - range to the upside till we get to the nearest resistance level with volume.