What volume tells you: whale bars

Lesson 3/6~5 min
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Volume shows how much money stands behind a price move; volume far above average marks the moments when big players come to the table.

The faint bars at the bottom of the chart are volume: how many shares (or coins) changed hands during that candle. A green bar means the candle closed up, a red bar means it closed down. Volume does not tell you where price is going; it tells you how ‘heavy’ the move is.

A rise on low volume is a handful of buyers pushing price; it can easily be given back. A breakout on high volume shows many people deciding at the same time. That is why you often hear about ‘volume confirmation’ in technical analysis.

The candles framed in orange in the chart above are ‘whale bars’: candles where volume rose far above its recent average. At these moments a big player has usually bought or sold, a piece of news has come out, or an important level has broken. The line in the lower panel is volume relative to its average; above 1 means more than average, below 1 means less.

When you read a whale bar, look at the candle itself as well. A long green candle on high volume describes strong buying. A high-volume candle with a long upper wick may show buyers running into heavy selling above. The same volume tells a completely different story with a different candle shape.

How to read it

  1. Look at the general level of the volume bars: has volume been rising or falling lately? An advance that continues on shrinking volume may be getting tired.
  2. Find the orange-framed whale bars and look at the candle shape: is the body long, or the wick? Volume says ‘how much’, the candle says ‘who won’.
  3. When a support or resistance breaks, look at volume: if volume on the breakout candle is clearly above average, the breakout is more convincing.
  4. Note where the ratio line in the lower panel rises far above 1; price often reacts at those levels when it returns to them later.

In this state right now

Liquid symbols whose daily volume is currently more than twice their 10-day average.

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We measured

In our measurement on crypto charts, filtering reversal signals with a ‘high volume’ condition did not help on short time frames: on the 15-minute chart, signals with volume above twice the average did WORSE than the rest. On the 4-hour chart, high-volume turning points looked slightly better, but the difference was not strong enough to separate from chance.

Source: BBL measurement bench: 32 crypto pairs, 4 hour / 1 hour / 15 minute, about 80,000 MACD reversal signals ·

Trap

The most common mistake is treating every high-volume bar as ‘buying’. Volume is the amount traded where buyers and sellers meet; every purchase has a sale on the other side. High volume only says ‘a lot happened here’. What happened is told by the candle's shape, where it closed and the candles that follow. Chasing high volume as confirmation on short time frames, as our measurement showed, usually means arriving late.

Tip

For some BIST data sources volume can show as zero; that does not mean the market stopped, it means the data was not delivered for licensing reasons. If there is no volume strip on the chart, do not interpret volume.

Glossary

Volume
The number of shares or coins that changed hands during a candle.
Relative volume
Current volume divided by its recent average; 2 means twice the average.
Whale
A player trading in amounts large enough to move price on their own.

Mini quiz

  1. What does volume tell you directly?
  2. What can a high-volume candle with a long upper wick tell you?
  3. In our measurement, how did a ‘high volume’ condition affect reversal signals on the 15-minute chart?

Try it now

See symbols with a volume spike in the screener →

For information only, not investment advice.