Price by Volume Chart (PBV)
What Is a Price by Volume Chart (PBV)?
A price by volume (PBV) chart is a horizontal histogram plotted on a security's chart, showing the volume of shares traded at a specific price level. Intermittently, price by volume histograms are found on the Y-hub and are utilized by technical traders to predict areas of support and resistance.
Understanding a Price by Volume Charts
Price by volume charts are utilized to delineate high buying and selling interest at specific price levels, which can be indicative of support and resistance in a given security. It's generally expected to see the price of a security face little resistance while going between levels that have small PBV bars, however the price might experience difficulty moving above or below areas with large PBV bars. Some price by volume charts additionally portray the difference among buying and selling volume by concealing segments green or red. These experiences can be particularly helpful for portraying price points as either heavy resistance or heavy support levels instead of generic levels.
It's important to note that price by volume charts show total volume at certain price levels throughout some stretch of time. This implies the projected support and resistance levels in the future may be obsolete. For instance, if a stock experienced a terrible quarter and an extreme sell-off followed, there might have been an exceptionally high level of volume on one day, however that may not be totally pertinent as a support level moving forward. Simultaneously, the support and resistance levels are more important looking forward than investigating the past, since it has been added throughout the whole time span.
Periodically, price by volume charts are utilized related to different forms of technical analysis to boost the chances of progress, including both chart patterns and technical indicators. For instance, a trader might utilize trendlines to affirm the presence of support or resistance rather than solely depending on volume bars to show these pivot points.
Price by Volume Chart Example
The accompanying chart shows an illustration of the SPDR S&P 500 ETF (NYSE ARCA: SPY):
In the chart above, you can see that most volume over the period has been between two price points. These price points filled in as key areas of support and resistance towards the finish of the period, with the rebound toward the beginning of May. In any case, it's worth taking note of that the majority of these levels were created during early Feb., when the fund saw the highest volume.
Highlights
- Price by volume charts are utilized to show high buying and selling interest at specific price levels.
- They are otherwise called "volume by price charts."
- They are generally utilized related to different forms of technical analysis.
- They are indicative of price levels over a certain period of time.
