The Volume function plots a histogram below the price chart. Each bar on the histogram represents the number of transactions for the corresponding day on the price chart. For stocks, it represents the number of shares traded (in 100’s) and for commodity futures the number of contracts or lots traded.

Volume aids the interpretation of chart patterns such as head-and-shoulders or triangles.

Increasing volume accompanying a market move indicates that the trend is likely to continue. In contrast, a decrease in volume signals a decline in participation and so a likely change of trend. With stocks, an increase in volume has often preceded a breakout to higher levels. Bear markets are often accompanied by long periods of low volume, as can be seen on longer-term charts (weekly and monthly.)

References

Edwards & Magee. Technical Analysis of Stock Trends.