Recently, while analyzing the market, I discovered a classic phenomenon: divergence between volume and price.

Many people don't quite understand this concept, but it can be quite helpful in judging turning points in the market.

Simply put, volume-price divergence means that the price of the coin and the trading volume are moving out of sync.
A common situation I see is: the coin price is rising sharply, but the trading volume is shrinking, which should raise caution.
Conversely, when the price is falling but the trading volume is increasing, it could be a bottom signal.

There are mainly two types of volume-price divergence.
One is increasing volume with falling price, meaning trading volume is rising but the coin price is dropping.
This usually occurs at the early stage of a downtrend, indicating what?
After a period of gains, more and more people are making money in the market, and everyone starts selling their holdings, causing the price to start declining.
From a trading perspective, this is a sell signal.

The other type is decreasing volume with rising price, meaning trading volume is shrinking but the coin price is going up.
This typically appears at the end of an uptrend.
If the price continues to rise but the volume decreases, it indicates strong control by the main players, with large holdings locked in their hands.
But be cautious: if suddenly the volume starts to increase afterward, it could mean the main players are beginning to sell at high levels.

The key to understanding volume-price divergence is to look at the underlying logic.
High-volume decline at the top suggests the main players are fleeing;
low-volume increase suggests it might be the last shakeout by the main players, and a reversal could be imminent.
That’s why the volume-price divergence indicator is so important for identifying tops and bottoms.

In my own experience, I find that simply watching the price movement can be easily deceived, but adding volume analysis reveals more clues.
Next time you analyze the market, consider paying attention to whether volume-price divergence occurs, as it might reveal some different opportunities.