As being an admirer of R N Elliott's phenomenal discovery of the, almost accurate, underlying structure of any freely traded market I was curious to know whether the same theory is being applied in the fluctuation of the volumes in Indian Markets from the time the data is available and I found the following (shown in fig below)
The graph above is self explanatory as you can see the move in volumes of Indian Stock markets (NSE) from 1995 to 2011 is been perfectly conforming with Elliott's Wave Theory in terms of most of its guidelines and rules.
Also if we apply Fibonacci ratio analysis to this graph the overall up move which we have seen in volumes from 1995 to 2009 is been correcting since and the correction will continue till the time the whole up move retraces 61.8% on the downside. As you can see in the chart the numbers written in red color are the volume figures at bottom, top and 61.8% retracement juncture.
So before the volume could pick up in the markets it has to dry down to 61.8% retracement level (shown with red line). So this is also a signal for us to know that the markets have bottomed out.
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