What CVD Reveals Behind Candlestick Movement
Candlestick charts only display the resulting price trajectory. Cumulative Volume Delta (CVD) measures whether the underlying force driving that trajectory was aggressive market buying (taking liquidity at the ask) or aggressive market selling (hitting the bid).
The Absorption Pattern:
If price drops into support and CVD drops heavily into negative territory, but price fails to break lower, a large buyer is absorbing all market sell orders with passive limit bids.
Trading Spot CVD vs. Futures CVD Divergences
Comparing Spot CVD against Perpetual Futures CVD reveals who is leading the market move. When Spot CVD trends strongly upward while Futures CVD is flat, real institutional spot accumulation is driving the move, a far more sustainable trend than futures-leveraged momentum.
Practical CVD Execution Rules
- Identify a key daily pivot level (S1, S2, R1, or R2).
- Wait for price to probe the level and form a clear divergence between the price swing and the CVD line on the 15-minute chart.
- Enter on the close of the first candle that aligns with the direction of the divergence.