Cumulative volume trend and 200-session polarity

A three-condition chart hypothesis

Editorial reading: TradersWeek frames the archive workflow as a three-condition chart hypothesis. First, treat the 200-session average as a polarity line. Second, use the slope of on-balance volume, the cumulative, directionally signed volume line, to confirm or reject a test of that line. Third, check short interest before treating a volume-price surge as genuine demand.

The method states that the trend of cumulative volume confirms a price trend versus the 200-session average, while a change in that volume-total trend is the cue for a change in price direction.

Scale and the coincidence point

A cumulative volume line is treated as usable only when it is co-plotted with price on a proportioned, adjustable scale that can be re-tied at a chosen coincidence point so tracking and divergence can be inspected on any chart segment.

The coincidence point is the chart location where the cumulative-volume scale is tied to price so the two series can be forced to track on a chosen interval. Volume-price analysis is that joint reading of price structure and the co-plotted volume total, including scale choice and the movable coincidence point.

The 200-session average as a polarity line

The moving average here is the 200-session average, used as a dynamic support or resistance line and as a simple above-or-below regime classifier.

In a declining-to-rising regime, price may first stall at a falling 200-session average, then pierce it, retest it more than once, and later ride that average as rising support once the average itself flattens and turns up.

An upside penetration of the 200-session average that occurs with an exceptionally strong cumulative-volume channel, after earlier failed attempts, is presented as the volume-price condition that later allows a return to that average to be treated as support.

In a rising-to-declining regime, price may lean on a rising 200-session average for repeated support until a break below is followed by a failed bounce that turns the now-flattening, then falling, average into a moving ceiling.

Slope, divergence, and channel-trend

On-balance volume is the volume-price running total. Its slope and channel-defined turns are the timing layer, not isolated daily volume spikes.

A steep rise in cumulative volume can accompany a lift of price through the 200-session average. When that volume thrust eases, the cumulative-volume slope flattens and price can fall back to the average.

Price holding a 200-session average while cumulative volume is weak or falling is presented as a divergence. After a break below the average, a failed rally back to it is treated as a completed bearish polarity shift.

Channel lines drawn on cumulative volume are used to mark each turn in the volume-total direction more clearly than the raw cumulative line alone. Channel-trend means those parallel bounds, so each change in volume-total direction is visible as a channel break rather than a vague curve.

Short-interest-distortion

High or rising short interest can force a rapid rise in both price and cumulative volume that resembles genuine demand. After covering reduces that short base, price can fall sharply while cumulative volume changes little.

That covering-driven pattern is short-interest-distortion: a rise in price and cumulative volume that can look like fresh demand, then reverse into a sharp price drop with little further change in the volume total once the short base is spent.

One illustrated spike combined an initial above-average volume advance with a second rise of more than 10 points on large daily volume at the same time short interest dropped sharply.