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Identifying divergences between price and volume.
Volume divergence occurs when price and volume move in opposite directions. It's a warning signal that the current price trend lacks the participation needed to sustain itself and may be approaching a reversal or significant pullback.
Key insight: In healthy trends, price and volume move together. When they diverge, something is wrong beneath the surface. The market is moving on less and less conviction, even as price continues in its trend direction. This is unsustainable.
Volume divergence is particularly powerful because it reveals institutional behavior. When institutions stop participating in a rally (volume declines), retail traders are often the last ones buying — and they're about to become exit liquidity.
Apply this concept in combination with others. No single concept tells the whole story - confluence is key.
The Academy teaches this concept through structured lessons with real chart examples.
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