"Vertical volumes" are a tool for volume analysis used in trading, including the Forex market. In the context of trading, volumes show the number of contracts or trades that have been made in the market over a specific period of time. The use of vertical volumes allows traders to analyze activity at different price levels within a given time frame.
Support levels (or key levels) in trading refer to important support and resistance levels that have significant meaning for trading. These levels can indicate places where the price may reverse or face difficulties moving up or down. Combined with vertical volumes, support levels help traders understand where strong buying or selling is occurring and where the price may encounter significant resistance.
When large volumes appear on a certain price level in the chart, it may indicate the importance of that level to market participants. For example, if there is a significant volume increase at a price level, it could signal strong interest in buying or selling, and that level may become an important support or resistance zone.
Vertical volumes can be used to confirm the strength of a trend. If volumes increase during a price rise or fall, it can indicate the strength of the current trend. Low volumes at resistance or support levels may suggest weakening of the trend.
Traders can use vertical volume analysis along with other technical analysis tools to make decisions about entering or exiting a trade. For example, a breakout above a resistance level with increasing volumes may signal the continuation of the trend.
If a large increase in volume is observed on a Forex asset chart as it approaches a resistance level, it may indicate that the market is ready to break through this level. On the other hand, if volumes begin to decrease as it approaches this level, it may suggest weakness in the trend and a potential reversal.
In general, vertical volumes and support levels are important tools for traders, as they allow for a more accurate assessment of market dynamics and decision-making based on supply and demand.