Large bearish candle with huge volume = sign of trend reversal (look for 2 candles to confirm)
Logic:
"Large bearish + huge volume" represents a situation where extreme divergent views appear in the market, often indicating a point of major player turnover.
Action:
At the end of an upward trend, observe: large bearish candle + huge volume
Subsequent 2 candles show no strong rebound
Break below the lowest price of the large bearish candle → short position
If strongly penetrated back into the midpoint of the large bearish candle, then exit
The first strong bullish candle after the low volume = Short-term bulls entering
When the trading volume drops to a "low volume," the market has almost no trading intention, often approaching a turning point. Soon after, a strong bullish candle appears (≥ 2 times the low volume), indicating that funds are re-engaging. Strategy: Go long on the closing of the strong bullish candle, with a stop loss at the low point of the candle.
Logic: Low volume = no selling pressure, re-engaging volume = change of direction.
The first strong bullish candle after the low volume = Short-term bulls entering
When the trading volume drops to a "low volume," the market has almost no trading intention, often approaching a turning point. Soon after, a strong bullish candle appears (≥ 2 times the low volume), indicating that funds are re-engaging. Strategy: Go long on the closing of the strong bullish candle, with a stop loss at the low point of the candle.
Logic: Low volume = no selling pressure, re-engaging volume = change of direction.
Volume increased significantly, but the price hasn't risen much = false breakout short
Sometimes we see a sudden increase in volume, but the price only breaks through a little and then stops, unable to form a big upward candle. This is a typical case of "unable to push + unloading". Strategy: If the price does not form a big upward candle within two K bars after the breakout and instead falls back, enter a short position.
Logic: High volume but low price = unable to push = false breakout.
"Weak Rebound" Short Selling Strategy After a Huge Volume Bearish Candle
If a gigantic bearish candle with high volume (≥ 2-3 times the average volume) appears, it indicates a significant liquidation of bulls. If the subsequent rebound is on low volume (significantly below the average volume), it is a replenishment of positions, not genuine buying pressure. Strategy: Short when the weak rebound touches the previous support level and turns into resistance.
Logic: Huge volume drop → Low volume rebound = Continuation of the decline.
The trend continuation strategy of a volume-reducing pullback to the moving average
In an uptrend, as long as the price falls back to the moving average (such as MA20) but the trading volume significantly shrinks (below 50% of the average volume), it indicates that the pullback is not a sell-off but rather a lack of selling pressure. The trend is likely to continue. Strategy: Enter a long position when a small bullish candle appears during the volume-reducing pullback to the moving average, with a stop loss below the moving average.
Logic: Volume-reducing pullback = no one willing to sell.
Price-Volume "Disconnection" Warning Reversal Strategy (No Volume New High = Short Selling)
When the price reaches a new high, but the trading volume does not increase in tandem, and is even lower than the previous peak, this is a typical case of "strong price weak volume". This indicates that the rise is driven by sentiment, not real capital. Strategy: Wait for the first volume increase bearish candle to confirm the top, open a short position at the closing price, and set the stop loss at the previous high.
Logic: Price rises without volume = no real buying pressure, easy to reverse.
Trend Following Strategy of "Volume Ladder" for High-Level K-Line (Trend Judgment)
In a trending market, if the trading volume shows a "ladder-like increase or decrease", the direction is very reliable:
Uptrend: Each wave of rising volume is higher than the previous wave.
During pullbacks, the volume is low, showing a ladder-like decrease.
Strategy: Enter the market in the direction of the trend during the pullback at the lower level of the ladder + on reduced volume (going long in an uptrend, going short in a downtrend). Stop-loss is placed at the "lower edge of the previous step" of the ladder's ascent/descent. Volume-Price Logic:
A high-level "volume ladder" indicates a healthy trend structure and strong sustainability.
"Trend Continuation Breakout" Strategy in High Volume Contraction (Applicable for Both Long and Short Trading)\n\nIf the price experiences a unilateral move at a high or low level and then enters a brief consolidation phase, with a significant decrease in trading volume, this indicates that the main force is "controlling the market to prevent chaotic movements from bulls and bears." The less volume during the consolidation, the cleaner the breakout. Strategy: When a breakout with increased volume (≥ average volume 1.5 times) occurs at the end of the consolidation, enter the market in the direction of the trend. Set the stop-loss back within the consolidation range by one level. Volume-Price Logic:\n\nUnilateral Move → Volume Contraction Consolidation → Increase in Volume → Continuation of Direction.
The "bear exhaustion" rebound strategy of price drop with no volume drop (reverse long)
In a downtrend, if the price keeps making new lows but the trading volume cannot continue to expand (volume levels off or decreases), it indicates insufficient bearish momentum and no new selling pressure. The trend is entering its final stage. Strategy: Wait for the first large bullish candle (but the body doesn't have to be very big), then take a small long position at the closing price of the bullish candle, with a stop loss set at the new low. Volume-price logic: Price drops with no volume → Downtrend lacks momentum → Easy to rebound.
The 'Second Confirmation K-Line' Entry Strategy After a Huge Volume Test (Trend Following)
When the market direction is unclear, a 'huge volume test K' often appears, but when the K-line closes, the direction remains ambiguous. Strategy: Do not make predictions, but wait for the second confirmation K-line. If the second K-line continues to extend in the testing direction and maintains above average volume, then enter in the direction of the trend. Set the stop loss at the low/high point of the testing K-line. Volume-price logic: a huge volume is a false move, while two consecutive huge volumes represent a true breakthrough.