Volume and the price-volume relationship

This is lesson-collection #03 of Stock Knowledge 101, merging the former kb07–kb08 (2 mini-lessons). Read in order.

Volume & basic volume-price relationships

This is Lesson 7/31 of Stock Knowledge 101 〔Volume-Price〕.

• Volume = shares traded per unit time, reflecting participation.
• Price up + volume up: healthy, funded rally; price up + volume down: weak, caution.
• Price down + volume up: panic or distribution; price down + volume down: selling eases, may stabilise.
• Low-volume launch at lows, high-volume stall at highs are the two key turning signals.

📌 Price is the result, volume is the evidence; rallies without volume are often fake breakouts.

Volume-price divergence: an early warning

This is Lesson 8/31 of Stock Knowledge 101 〔Volume-Price〕.

• Top divergence: price makes new highs but volume/momentum fails to → upside exhaustion.
• Bottom divergence: price makes new lows but volume/indicator doesn’t → downside easing, possible bottom.
• Divergence isn’t an instant reversal but a warning that the trend may be loosening; wait for confirmation.
• MACD/RSI divergences are more objective than volume alone; watch both.

📌 Divergence = price fights the evidence; when they fight long enough, one side yields.

⚠️ This article is a methodological illustration and does not constitute any investment or trading advice. Markets are risky; decide with caution.