The increasing volume is before the red day. Not increasing volume on the red day.
That's the difference between profit taking and change in trade psychology.
If volume is increasing, up to the red day, retail's mindset is the stock deserves a higher value. A red day under those circumstances would indicate profit taking and the volume could be small or large depending on retails trading gain requirements.
But if volume is decreasing, up to the red day, retail's mindset is the stock is reaching enough is enough. A red day under those circumstances would indicate a change in trade psychology. Top value was reached and selling takes place.
The way retail is trading the stock move or the psychology of their actions are for different reasons. Mindset isn't; it deserves higher value, it's sell now because value has been reached.
After profit taking, re-entry occurs, selling out, re-trace occurs.
That's why you can hold with increasing volume before the red day, but should exit with decreasing volume before the red day.
But no matter the volume before; a second red day; is the you must exit, not should exit, indication. Two red days happening would be a capital preservation indication. The profit takers are not coming back in. Nor is the selling out, going away.
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