Blowoffs and selling climaxes are two dramatic market actions that need to be mentioned when a stock trader is using volume and open interest as part of technical analysis.
A general rule is when a slight discrepancy exists between the projected price target and a plainly evident support or resistance level, the trader is safest just adjusting the price target to the level of the support or resistance.
Just '"eyeballing" the volume bars doesn't offer enough precision to detect a significant shift in volume flow. The simplest and best volume indicator is on balance volume or OBV.
Continuation patterns differ from reversal patterns in that continuation patterns usually indicate that the sideways action seen on a chart is merely a pause in the prevailing trend.
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