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Whale Trading

Volume: The Energy Hidden Behind Price

So far we have covered:

But if you look at charts long enough, you'll start to ask:

"Is this price rise real? Or is it just a fake pump?" "Price has dropped a lot, will it stop now?"

The answer lies in Volume.

Volume is the "fuel" of the market. A fancy sports car (beautiful chart) cannot go far without gas (Volume).

In this guide, we will cover:

  • The true meaning of Volume bars
  • The relationship between Volume and Trend (Basic Rules)
  • What Volume Spikes tell us
  • Viewing Volume on different timeframes
  • Common misconceptions beginners have

1. What Do Volume Bars Tell Us?

Volume is a number that tells us:

"How much asset changed hands during that period."

On most charts:

  • It is located in a separate window at the very bottom.
  • It is in the form of a Bar Chart.
  • It corresponds 1-to-1 with the candles above.
  • High Volume Bar: A lot of trading happened (Active market, high interest).
  • Low Volume Bar: Little trading happened (Quiet market, no interest).

First Rule: Price movements supported by high volume are generally more "reliable" and "sustainable" than movements with low volume.

2. Volume and Trend: The Health of a Trend

The easiest way to read volume is to see its consistency with the trend.

Healthy Uptrend

  • Price Rises + Volume Increases: (Everyone is rushing to buy) → Good
  • Price Falls (Correction) + Volume Decreases: (No one wants to sell, just taking a break) → Good

Healthy Downtrend

  • Price Falls + Volume Increases: (Everyone is panic selling) → Good (for the downtrend)
  • Price Rises (Bounce) + Volume Decreases: (No one dares to buy against the trend, just a dead cat bounce) → Good (for the downtrend)

Warning Signals (Divergence)

  • Price makes a New High, but Volume Decreases: (Price went up but no one followed) → Watch out for reversal!
  • Price makes a New Low, but Volume Decreases: (Price went down but selling pressure dried up) → Watch out for a bounce!

3. Volume Spike: The Peak of Emotion

Sometimes you will see an unusually high volume bar (Spike). This usually happens in 2 situations:

3-1. The Start (Breakout)

  • Price breaks a resistance with massive volume after moving sideways for a long time.
  • It means: "Whales/Big Money have entered."
  • It is a reliable signal for the start of a big move.

3-2. The End (Climax / Exhaustion)

  • Price has been rising for a long time and suddenly shoots up violently with the highest volume ever seen (often leaving a long wick).
  • It means: "Retail (FOMO) rushed in + Big Money sold into them."
  • It is a signal for "trend end" or short-term reversal.

Tip: Don't rush to enter on a Volume Spike at the end of a trend, as you might be buying the top from whales.

4. Volume and Timeframes

Volume on each timeframe does not carry the same weight.

  • Volume Spike on 1-minute: Could just be someone fat-fingering a Market Order or a small whale playing short-term → Lots of noise.
  • Volume Spike on Daily: Huge amounts of money changed hands → Very high significance, could change the market direction.

When analyzing, always look at Volume on Higher Timeframes. If the 1-hour chart says volume is drying up (no one playing), but the 5-minute chart shows volume soaring... Be careful not to be fooled.

5. Volume vs Orderbook & Tape

Volume is "The Past" (What already happened). But if you want to see "The Present" and "The Future" (Intent), you need to look at:

  • Orderbook: Who is waiting to buy/sell at what price (Pending Orders).
  • Tape (Ticker): Who is actually pressing the buy/sell button right this second.

Volume is the sum of what happened on the Tape. Reading Volume with candles is a very good start. But if you want to go further, reading the Flow from Orderbook & Tape will help you see the picture more clearly (We will learn this in later chapters).

6. Common Mistakes

6-1. High Volume = Always Good?

  • No! High volume when price crashes means massive selling pressure (Bad for bulls).
  • You must consider the "Context" and "Location" of price.

6-2. Low Volume = Not Important?

  • A good Correction must have low volume.
  • If volume is high during a correction, it means someone is secretly selling (Distribution), not just resting.

6-3. Looking Only at Volume Bars Without Candles

  • Volume bars only tell "Quantity", not "Direction" (Colors of volume bars in some software only indicate up/down relative to the previous bar, not whether buyers or sellers won).
  • Must be viewed together with Price Action (Candles).

7. Checklist Before Trading

Every time you look at a chart, ask yourself:

  1. How is the average volume? (Is it currently higher or lower than usual?)
  2. Does volume support the trend? (Increasing when rising, decreasing when falling?)
  3. Is there a Volume Spike? (If so, where? Start of trend or end of trend?)
  4. How does volume relate to Support/Resistance? (Did it break with volume? Or bounce from support with volume?)

Summary

Now you are armed with the weapons for basic chart reading:

  1. Candles: Reading Emotion
  2. S/R: Reading Location
  3. Trend/Structure: Reading Direction
  4. Timeframes: Reading Perspective
  5. Volume: Reading Energy

In the next part, we will start combining these knowledge into "Chart Patterns". To see what hints they give us when these components come together.

Continue reading: Chart Patterns: Hidden Shapes in the Chart

Volume Analysis: Reading Market Energy in Crypto | Becoming Crypto Whale