There is a trading skill you absolutely must master. It can help you detect early signals of institutional capital entering the market and avoid sudden traps set by false signals. So how can you read the true language of the market from subtle fluctuations in trading volume? Today, I will share an effective method—by analyzing the three core elements of the "price-volume relationship," to capture key signals before price anomalies occur.

The two biggest fears in trading are: first, "false breakouts" that trap you immediately after entry; second, "declining volume during dips" that catch you at the halfway point of a correction. Everyone hopes to see confirmation of capital inflow after buying, which is a common expectation. But chasing high with volume can lead to being cut, and bottom-fishing with shrinking volume might already be too late. The hardest point to grasp is the golden trigger point of "volume and price rising together."

What I want to share is a complete volume analysis system: first, using "volume anomalies" to identify the budding stage of trend; second, using "volume-price patterns" to recognize the switch points between shakeouts and rallies. Mastering this system allows you to find the true footprints of the main players amid a sea of false signals.

Trading volume and price are the two most fundamental and truthful elements of the market. Let’s first look at their core characteristics.

First, volume-price analysis is the foundation of technical analysis. It directly reflects the market’s supply-demand relationship and capital sentiment, unlike some single indicators that can be easily manipulated. Second, volume is a confirmation tool—any price trend needs volume to back it up for it to be truly valid. To catch the main upward wave, you must understand the story behind the volume. Third, any coin that experiences a strong trend will show positive changes in volume before the price moves— even if only subtly—alert observers can notice these signs.

Many people still think of volume as "buy when volume increases, sell when volume decreases," which is a primitive approach. Long-term, this method makes it difficult to profit steadily and can be easily deceived by the main force through wash trading to create false volume. Have you seriously reviewed cases of volume-price divergence? When the price hits a new high but volume shrinks, it often indicates the upward momentum is exhausted; conversely, when the price hits a new low with increasing volume, it may signal the final release of sellers, and the bottom is near.

Including key price levels in your analysis reveals a pattern: when a "price rises with decreasing volume" divergence occurs at high levels, the price often tops out and reverses quickly, signaling risk. Similarly, during panic selling at lows, if "price falls with increasing volume" appears, the price tends to stabilize and rebound rapidly. Quite insightful, isn’t it?

Does this mean that just because a "bottom divergence" appears, you can confidently buy the dip? Not necessarily. I’ve distilled some core points from practical application. This method applies equally to mainstream coins like Bitcoin, Ethereum, as well as smaller tokens.

**First Trick: Synchronization of Volume and Price as a Signal of Initiation**

During the bottoming phase after a prolonged decline, if the price begins to rise slightly while volume shows gentle and sustained growth—this "price rising with increasing volume" can last for a while—it indicates that funds are quietly accumulating at the bottom, and a trend may be about to change. This is the earliest sign of a rally.

**Second Trick: Volume Anomaly as an Attack Signal**

Pay close attention to sudden spikes in volume or stair-step increases. A candlestick with volume significantly higher than the previous average often marks an important turning point. If this is accompanied by a breakout above key support levels or moving averages, it’s a strong indication that institutional funds are launching an attack.

**Third Trick: Risks and Opportunities in Volume-Price Divergence**

After a sharp rise, if the price continues upward but volume fails to keep pace or even shrinks—forming a "top divergence"—it’s a warning that the rally may be losing strength. Conversely, after a deep dip, if a "bottom divergence" occurs—where the price stabilizes or moves sideways with intermittent volume increases—it indicates funds are accumulating at the lows.

**Four Dynamic Risk Control Standards**

There’s no 100% foolproof method; markets always have surprises. It’s recommended to set your risk control points at: when the price breaks below a key support with abnormal volume expansion, or when it breaks through a key resistance with volume continuously shrinking. When either occurs, reduce your position or stay on the sidelines accordingly.

Having identified the synchronization of volume and price signals, let’s look at how to operate once a trend is established. During an upward move, there will inevitably be pullbacks or shakeouts. How can you use volume changes to find the best entry points during the main rally? The key is to catch the "shrinking volume during pullbacks" signal—when volume drops significantly during a correction, indicating that the floating positions have been cleaned out and the main force is preparing for the next move. This is often the best time to enter.

In practical trading, you might do the following: during an uptrend, whenever the price pulls back near an important moving average, if you see volume sharply decreasing to below 30% of recent average levels, that position is relatively safer. Because shrinking volume indicates selling pressure has been released, and the next step is accumulation. Conversely, if volume increases during the pullback, it suggests ongoing selling, and it’s better to wait.

The beauty of this method is that it doesn’t rely on complex indicators or frequent chart checking. As long as you learn to observe the most straightforward volume-price signals, you can find real opportunities amid market noise. From detecting the "volume-price synchronization" at the bottom to pursuing certainty with "shrinking volume during pullbacks," and timely profit-taking at the highs with "divergence"—this forms a complete trading cycle.

The key is patience. True main forces are never in a hurry; their pace is often much slower than retail traders. Learning to interpret volume gives you the key to understanding the intentions of the big players.