Score one swing with volume, bands, and price divergence

Score the same swing three ways

Daily total volume, a signed volume line, and an up-down volume oscillator can be read against the same price swing. The oscillator is a momentum-style series built from the spread between advancing and declining volume, then compared across a defined lookback so breadth participation can be read as expanding or fading.

Bollinger Bands form a two-standard-deviation envelope around a moving average of that volume-derived line. They mark when participation stretches away from its recent baseline. Divergence is the remaining check: price makes a new swing while a volume or breadth series fails to confirm it.

Start from normal volume

Daily total volume can be reduced to a 10-session moving-average baseline. That short average is the normal volume against which later volume can be judged as expanded or contracted, then compared with price as a confirmation or nonconfirmation check.

Relative to that volume baseline, a breakout from a small congestion range was associated with about a 20 percent volume increase. A sharp selloff was associated with about a 40 percent increase.

Sign a volume line from the close

A volume line is a cumulative total that adds or subtracts session volume according to a signing rule. Session volume is added when the close is above the high-low midpoint and subtracted when the close is below. The result is a participation path that can be compared with price.

Read the up-down volume oscillator

An up-down volume oscillator is built by subtracting declining volume from advancing volume and then taking a 10-session average of that spread versus the same spread from 12 sessions earlier.

On the illustrated exchange series, readings near +25 million shares were treated as momentum-peak territory and readings near -20 million shares as oversold-type territory, while some oscillator highs printed nearer +50 million and some price bottoms aligned with the -50 million area.

The same up-down volume oscillator can be plotted against other index or futures price bars to compare broad-market participation with a narrower price series.

Mark the volume line with bands

Bollinger Bands set two standard deviations from a 20-session average of a cumulative volume line. They mark when that line holds above the average after an upper-band break, or slips below the average while price continues to climb or fall.

Test the swing for divergence

Illustrated divergences include a volume series rolling over while price holds or rises, a volume spike unmatched by a new price high, and a price low unmatched by a new volume-line low. Each mismatch turns the chart condition into a testable hypothesis.

Compare volume momentum with price momentum

The same momentum formula can be applied to the up-down volume spread and to daily price so peaks in volume momentum and price momentum can be compared on one chart.

Read the three scores together

Editorial: begin with normal volume versus price, then read the up-down volume oscillator, then see whether the volume line is holding above or slipping below its band average, and finally ask whether price and participation diverge. The archive supplies the workflow. The three-way score is the editorial habit.