Volume confirms the strength of forex alligator indicator interpretation trend or suggests about its weakness. A rising volume indicates rising interest among traders, while a falling volume suggests decline in interest.
Extreme Volume readings — Climax Volume often highlight price reversals. Points where market trades on high volume are the points of strong support and resistance. Volume is the second most valuable data after the price itself. Large volume signifies that there is large number of market participants involved, including financial institutions. Small volume tells that there are very little participants in the market, neither buyers no sellers have any significant interest in the price.
In addition, no financial institutions will be involved, thus a market is going to be moved only by individual traders and so the move will be weak. Volume helps to learn about the health of a trend. When price is going up and volume is decreasing, it tells traders that a trend is unlikely to continue. A downtrend is strong and healthy if volume increases as price moves lower and decreases when it begins retracing upwards.