Recently, while analyzing the charts, I thought of a particularly important concept, which is volume-price divergence. Many people actually don’t quite understand this thing, but it’s really key for judging turning points in the market.

Simply put, volume-price divergence means that the trading volume and the price of the coin show contradictory movements. You’ll find that sometimes the price is rising while the volume is decreasing, or the price is falling while the volume is increasing. This mismatch often hides market reversal signals.

I think the most practical situations are these two. The first is increasing volume with falling price, meaning trading volume is expanding but the price is dropping. This usually appears at the early stage of a trend shifting from upward to downward. When does this happen? It’s after the price has risen nicely for a while, and the market has accumulated a lot of profit-taking chips, with everyone starting to sell off. So, increasing volume with falling price becomes a sell signal.

The other is decreasing volume with rising price, meaning trading volume is shrinking but the price is climbing. This typically occurs in the later stage of an uptrend, indicating what? It suggests that the main players are controlling the market, locking in a large amount of circulating chips, and only a small volume is needed to push the price higher. But if later you see volume suddenly increase again, be cautious—it’s very likely that the main players are offloading at high levels.

So, volume-price divergence is actually telling you that the market’s supply and demand relationship has become abnormal. High volume at the top signals the main players are fleeing, while high volume at the bottom could be a sign of a potential reversal after a shakeout. That’s why many people regard volume-price divergence as an important reference for identifying tops and bottoms.

I also wrote an article about trading volume before; if you’re interested, you can check it out. Actually, mastering the logic of volume-price divergence really helps in judging market turning points. Recently, I’ve been watching the trends of MAV and ARKM; some signals are worth observing. If this article helps you, feel free to share it with your friends.