In this article that was published in Stocks & Commodities magazine, Gail Mercer discusses how divergence between price and volume for trading forex, futures, or exchange traded funds can add to a trader’s profitability.
Stocks & Commodities Magazine: The Trader’s Bread and Butter – Volume Divergence
Volume Divergence is a precursor to price movement. While it took years to fully understand the significance of volume divergence and analysis, Gail is now considered an expert on volume analysis and divergence. To put volume divergence in its simplest terms, if prices are making new highs then volume should also make new highs. However, once volume begins decreasing then you can anticipated that price will at least retrace to test for sellers. These retracements can lead to very low risk entries into a trend. Of course, traders would still monitor the volume to ensure that buyers continue to come into the markets.
In the Stocks & Commodities article, Gail discusses how day traders can monitor volume on price highs and lows for indications that price will continue on its path or if price is about to reverse.
Download the Stocks & Commodities article by Gail Mercer, The Trader’s Bread and Butter – Volume and Divergence (Stocks & Commodities V. 30:9 (36-44): Volume and Divergence by Gail Mercer.)