I consider price action the most important while reading charts. Volumes come next. The most important thing I have seen is that we need to see volumes when important resistances are crossed… E.g breakout from a pattern like cup and handle, inverted head and shoulders, or double bottom, or multi year breakout etc… This usually needs to happen with huge volumes… After that rally may continue with lesser volumes, and after a time consolidation happens on low volumes. Post consolidation, resumption of upmove again needs to happen with big volumes. And so on.
For stocks to go up, it needs efforts to push it up, and hence bigger volumes are needed as stock price moves against gravity. (except in manipulated stocks where stocks move in small circuits.) While falling, even a lack of buying and minimum selling pressure will create big falls because many a times, while stocks fall precipitously, the atmosphere around the stock or the market or both is very bearish.
@ishu Personally I am not a big fan of DCF based investing, so you will have to dig deeper and figure out where you can apply DCF if at all. The only thing I can say is that its applicable to predictable businesses.
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