The divergence between indicators and prices is a method we often use to judge whether prices have risen or fallen too much. Divergence also applies to volume indicators, and volume-price divergence is one of the most commonly used analysis methods.
During an uptrend, when prices reach a new high but volume fails to reach a new high at the same time, this is called a top divergence. During a downtrend, when prices reach a new low but volume fails to reach a new low at the same time, this is called a bottom divergence.
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Divergence indicates that the momentum of the original trend direction has weakened. Although prices break through, the underlying momentum is insufficient to maintain the original trend, signaling that a trend reversal may occur. Among them, volume-price top divergence is a commonly used and relatively effective method.
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