Setup 6 · CVD Divergence

Level: advanced · Target R:R: 1:2.5 and above · Window: at a strong technical level, outside a strong trend

The CVD accumulates every delta over time: it is the net pressure of the aggressors. When price makes a new high but the CVD makes a lower high (or the reverse at the lows), the real pressure is running against the price. The new highs are "empty." It is a powerful reversal signal, provided it happens near a level that matters.

The two signals

• Bearish divergence: price at a higher high, CVD at a lower high. Short.
• Bullish divergence: price at a lower low, CVD at a higher low. Long.

In both cases, the divergence must form at a strong technical level: VAH or VAL, previous day's high or low, persistent heatmap wall. A divergence in the middle of the range is only information.