When price rises and tick volume falls
Posted: Sat Oct 31, 2026 8:37 pm
A common quick read: price makes a new high, but tick volume on that move is lower than on the previous push. The idea is that conviction is fading.
That can work, but the setup deserves skepticism. Tick volume in forex depends on time of day, so a lower count on a late-session push may simply reflect fewer participants, not weaker conviction.
Compare like with like. A push at 13:30 GMT should be compared with other pushes at the same time of day, not with the last hour's bursts.
Another problem is the timeframe. On a one-minute chart, individual bars are noisy, and a volume dip in a single bar means little. Averaging across three to five bars reduces the noise.
A reasonable test is to collect fifty cases of the pattern on one pair, mark the outcome in the following ten minutes, and see whether the hit rate beats a coin flip by a meaningful margin.
Often it does slightly. Rarely does it do enough to carry a system alone.
Has volume divergence of this sort been tested on your charts, and did it beat random?
That can work, but the setup deserves skepticism. Tick volume in forex depends on time of day, so a lower count on a late-session push may simply reflect fewer participants, not weaker conviction.
Compare like with like. A push at 13:30 GMT should be compared with other pushes at the same time of day, not with the last hour's bursts.
Another problem is the timeframe. On a one-minute chart, individual bars are noisy, and a volume dip in a single bar means little. Averaging across three to five bars reduces the noise.
A reasonable test is to collect fifty cases of the pattern on one pair, mark the outcome in the following ten minutes, and see whether the hit rate beats a coin flip by a meaningful margin.
Often it does slightly. Rarely does it do enough to carry a system alone.
Has volume divergence of this sort been tested on your charts, and did it beat random?