Summary- Volume Price Analysis by Anna Coulling

 Anna Coulling, a well-regarded author and full-time trader, emphasizes the importance of volume and price action in her book, "Volume Price Analysis." She claims this method can be applied across various markets, including cryptocurrency, stocks, and forex. Anna describes learning this method as a defining moment in her trading career and aims to make it equally transformative for her readers.

Core Concepts

Volume as a Leading Indicator: Anna asserts that volume, combined with price, is the only leading indicator that reveals the future direction of the market. It also helps determine whether price action is valid or false. She credits Richard Wyckoff, a pioneer in this field, and his three fundamental laws: supply and demand, cause and effect, and effort and result.

Wyckoff’s Three Laws:

1. Law of Supply and Demand: When demand exceeds supply, prices rise, and when supply exceeds demand, prices fall.
2. Law of Cause and Effect: Volume is the cause, and price action is the effect. A large cause (volume) results in a large effect (price change), and vice versa.
3. Law of Effort vs. Result: The price action should reflect the volume action. Anomalies occur when there is a significant disparity between volume and price changes.

Practical Application

Candle-by-Candle Analysis: Anna emphasizes the importance of analyzing each candle with its corresponding volume. A candle starts neutral and fluctuates as bulls and bears battle. The closing price relative to the opening price, along with the wicks, provides insight into buying or selling exhaustion, which can indicate areas of support or resistance.

Validation Through Volume:

• A bullish move should be supported by increasing volume to validate the price action.
• Anomalies occur when price action is not proportionally supported by volume, signaling potential market manipulation.

Sequential Candle Analysis: In a strong uptrend, candles should increase in size sequentially, with a corresponding increase in volume. This indicates a valid accumulation phase. Conversely, the same principle applies to downtrends for validation.

Market Tops and Bottoms: Using price action and volume, Anna explains how to identify market tops (distribution phases) and bottoms. Increased volume validating the price action at these points is crucial.

Real-World Examples

Stock Example: Using the weekly chart of Einhell, significant candles with corresponding volume increases validate the moves. Conversely, large price moves without proportional volume suggest false moves or market manipulation.

Bitcoin Example: On the daily chart, significant price candles need to be matched with high volume to validate the move. Discrepancies between price changes and volume signal potential issues.

Conclusion

Anna Coulling’s "Volume Price Analysis" provides a comprehensive approach to understanding market movements through the lens of volume and price action. Whether you are looking for trend continuation, market tops or bottoms, or consolidation breakouts, ensuring the action is validated by volume is essential. This book is highly recommended for traders looking to deepen their understanding of market dynamics.

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