The divergence between indicators and prices is a method we often use to determine 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 while the trading volume fails to reach a new high simultaneously, this is known as a top divergence. During a downtrend, when prices reach a new low while the trading volume fails to reach a new low simultaneously, this is known as a bottom divergence.
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Divergence indicates that the momentum of the original trend direction has weakened. Although prices may break through, the underlying momentum is insufficient to sustain the original trend, suggesting that a trend reversal may occur. Among these, volume-price top divergence is a frequently used and effective method.
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