Hey traders — Barry Burns here from Top Dog Trading!
In this post, we’re diving into a powerful technique called Volume-Price Analysis. I’ll show you how to use volume spikes to identify key support and resistance zones based on actual trader behavior — not theory. By the end, you’ll know how to spot where big money is stepping into the market and how to use those levels to improve your trading decisions.
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Using Volume to Find Key Price Levels – Volume Price Analysis – Video
Introduction to Volume-Price Analysis
Hey traders, Barry Burns here with Top Dog Trading. Today, I want to walk you through one powerful aspect of Volume-Price Analysis—specifically, how to use volume spikes to identify key support and resistance levels in the market.
Spotting Significant Volume Spikes
We’re looking for moments where volume suddenly surges—dramatically higher than the bars before and after it. Ideally, the spike should be twice as high as surrounding volume bars.
This spike marks a point where heavy buying (demand) or selling (supply) came into the market. It’s not based on theory, math, or Fibonacci levels—it’s based on real trader behavior.
Drawing Support and Resistance from Volume Spikes
Once we see a volume spike, we place a horizontal support or resistance line at that price level.
- We’re not trying to trade the spike itself right away.
- Instead, we draw the level into the future and watch how the market reacts when it comes back to that price.
Why? Because when the price returns to that level, other traders are watching it too. They remember that strong buying or selling happened there before, so they’ll be deciding whether to jump back in or not.
Watching Market Reactions and Sentiment
Keep in mind—these levels are not guaranteed bounce points.
Market sentiment changes over time.
For example:
- When price comes back to a prior demand zone, but fails to bounce, it shows weakness and indecision.
- If the market then gaps down on high volume from that same level, it’s a strong bearish sign—showing that supply has taken over demand.
The Core Principle: Supply vs. Demand
At the heart of it all, markets only move because of supply and demand imbalances.
- When supply and demand are balanced, price consolidates and doesn’t move much.
- When one side overwhelms the other, price moves strongly—and that’s when we want to trade.
Volume spikes are great clues for spotting where these imbalances happened before and where they may happen again.
Example: Apple Daily Chart
In the video, I used Apple’s daily chart as an example.
- A gap up on a huge volume spike created a level of demand.
- Price later revisited that level several times—hesitating, consolidating, and eventually breaking down through it on big volume.
- That breakdown showed a shift from demand to supply—a bearish signal.
What’s amazing is that these price levels can remain relevant for months. Even long after the original spike, traders still react to those levels.
Combine Technicals with News
One important point: never rely on volume and price alone.
Major news events—like Apple’s product announcements or earnings—can completely override technical signals.
- News can cause emotional, knee-jerk reactions from traders.
- So always track economic calendars and company news.
As one of my mentors used to say:
“News trumps technicals.”
So use volume-price analysis, but always in context of current market news and sentiment.
Wrapping Up
Volume-price analysis is powerful because it’s grounded in actual trader behavior, not theory.
Use those volume spikes to mark key zones, watch how the market reacts when price returns there, and always combine it with broader context like news and sentiment.
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Until next time…
Happy trading, my friends!
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