What Is a "Volume-Price Divergence" and Why Is It a Warning Sign? ⎊ Path

What Is a “Volume-Price Divergence” and Why Is It a Warning Sign?

Volume-price divergence occurs when the price trend and the volume trend move in opposite directions. For example, if the price is making new highs (or higher lows in a bounce) but the volume is declining, it indicates that the upward movement lacks conviction.

This divergence is a strong warning that the current price trend is weak and likely to reverse soon.

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Glossar

Divergence Analysis

Concept ⎊ Divergence analysis is a technical analysis technique used to identify potential reversals or continuations in price trends by comparing the movement of an asset's price with the movement of a technical indicator.

Divergence

Analysis ⎊ In quantitative analysis, divergence represents a critical discrepancy between the direction of an asset's price action and the associated technical indicator, such as the Relative Strength Index or MACD.