Using percent scales zeroed at 12 March’s closing price and cumulative total, we see that, on 17 August, both price and demand (increase in cumulative ) had increased. However, as of 13 October, price had decreased whereas demand had increased. In effect, we see a shrinking supply and growing demand.
For convergence, the line should increase as price increases and decrease as price decreases. However, since 17 Aug, price and have diverged, that is price decreased as cumulative increased. This divergence serves as a probable indicator because it means, despite the price decrease, more buyers continue to accept an ask prices than sellers accept a bid price.
Published at Sat, 17 Oct 2020 19:30:46 +0000