Volume Dry-Up Breakout
Volume Dry-Up Breakout trades one of the cleanest accumulation signals there is: a base where volume contracts to a fraction of its normal level - sellers have finished selling and nobody i…
Volume Dry-Up Breakout trades one of the cleanest accumulation signals there is: a base where volume contracts to a fraction of its normal level - sellers have finished selling and nobody is supplying stock - followed by a price breakout above the base's high. The dry-up is the evidence that supply is exhausted; the breakout is the demand showing up against no supply, which is why these moves tend to travel. The exit rides the 20-day moving average.
It is a medium-difficulty, trending, daily swing-trading strategy in the volume-breakout family.
How it trades
| Ingredient | Meaning |
|---|---|
| VOLUMEDRYUP() | 1 when recent volume has contracted below half its longer-run norm, else 0 |
| HIGHEST(20) | The prior 20-bar high - the breakout level |
| SMA(20) | The 20-day moving average - the exit line |
Buy (breakout out of a dried-up base):
VOLUMEDRYUP() AND Close > HIGHEST(20)
Sell (loses the 20-day line):
Close < SMA(20)
When it works best
An excellent accumulation signal on names that build orderly, quiet bases before advancing. Its documented trade-off is that setups are less frequent - a genuine dry-up (a week at half the normal volume) followed immediately by a breakout is a specific alignment - so it trades rarely and rewards patience over activity.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.