What this unit covers
Learn to spot volume divergence: price making a new high while volume is lower than on the last high, a warning that a trend is losing real backing.
By the end you will be able to
- Explain what volume divergence is on a price and volume chart.
- Identify which two swings on a chart are comparable for this check.
- Treat spotted divergence as caution to weigh, not a certain signal.
How it starts: A New High, Second Look
- A stock you follow just touched a fresh new high.
- Fewer shares traded on this high than on the last one.
- Is this new high really as strong as it looks?
Words you will meet
- Volume divergence
- Price makes a new high or low while volume on that move is lower than on the last comparable swing.
- Swing high
- A peak in price higher than the moves right before and after it.
- Swing low
- A dip in price lower than the moves right before and after it.
- Volume
- The number of shares traded in a given period, showing how much participation backed a move.
In this module: Reading Charts
- Chart Patterns
- Breakouts
- Pullbacks
- Volume Confirmation (this unit)
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