Connect candles with volume

At the bottom of the chart, the coloured bars show volume. Each volume bar belongs to the candle directly above it and shows how much Bitcoin was traded during the same day. To judge whether the volume is high or low, compare the bar with those before it. A much taller bar means trading activity increased.

Bitcoin had been falling before 10 March 2023. The previous daily candle dropped by about 6%. On 10 March, candle X closed only about 1% below its open. Yet volume was about 2.4 times the average of the previous seven days.

Despite this heavy volume, sellers failed to produce another large fall. They made much less downward progress than on the previous day, which suggests buyers were absorbing much of the selling.

This combination can signal seller exhaustion. Sellers may still be active, but they are losing the ability to push price lower. Bitcoin began rising during the following days, which confirmed the exhaustion signal in this example.

When looking for seller exhaustion, first find a decline. Then look for a small falling body with volume clearly above its recent average. A rise in the following candles strengthens the signal.