DEFINITION of 'Price By Volume Chart - PBV'

A price by volume, or PBV, chart is a horizontal histogram plotted on a security's chart showing the volume of shares traded at a specific price level. Often times, price by volume histograms are found on the Y-axis and are used by technical traders to predict areas of support and resistance.

Also, known as volume by price charts.

BREAKING DOWN 'Price By Volume Chart - PBV'

Price by volume charts are used to illustrate high buying and selling interest in specific price levels, which can be indicative of support and resistance in a given security. It's common to see the price of a security face little resistance when traveling between levels that have small PBV bars, but the price may experience difficulty moving above or below areas with large PBV bars. Some price by volume charts also delineate the difference between buying and selling volume by shading sections green or red. These insights can be especially useful for characterizing price points as either heavy resistance or heavy support levels rather than generic levels.

It's important to note that price by volume charts show total volume at certain price levels over a period of time. This means that the support and resistance levels may be outdated looking into the future. For example, if a stock experienced a bad quarter and a severe sell off ensued, there may have been a very high level of volume on one day, but that may not be entirely relevant as a support level moving forward. At the same time, the support and resistance levels are more important looking forward than looking into the past since it has been summed over the entire timeframe.

Often times, price by volume charts are used in conjunction with other forms of technical analysis to maximize the odds of success, including both chart patterns and technical indicators. For example, a trader may use trend lines to confirm the presence of support or resistance instead of exclusively rely on volume bars to show these pivot points.

Price-by-Volume Chart Example

The following chart shows an example of the SPDR S&P 500 ETF (NYSE ARCA: SPY).

Price by Volume Chart Example

In the chart above, you can see that most volume over the period has been between two price points. These price points served as key areas of support and resistance towards the end of the period with the rebound in early-May. However, it's worth noting that most of these levels were generated during early February when the fund witnessed the highest volume.

Chart courtesy of StockCharts.com. 

RELATED TERMS
  1. Line Chart

    A line chart connects a series of data points with a line and ...
  2. Volume

    The number of shares or contracts traded in a security or an ...
  3. Weekly Chart

    A weekly chart is a technical price chart where each data point ...
  4. Daily Chart

    A line graph that displays the intraday movements of a given ...
  5. Volume Analysis

    Volume analysis is the examination of the number of shares or ...
  6. Zone Of Resistance

    Zone of resistance refers to the zone where a rising stock price ...
Related Articles
  1. Trading

    Interpreting Volume for the Futures Market

    Learn how to read the volume reports, look at the relation to liquidity and interpret volume.
  2. Trading

    Understanding Support and Resistance Levels

    Understanding support and resistance levels can help investors decide to buy or sell a security.
  3. Investing

    The Psychology Of Support And Resistance Zones

    Emotion drives the market more than you might realize. Find out how psychology affects support and resistance zones.
  4. Investing

    Using Volume Rate Of Change To Confirm Trends

    Wise traders rely on indicators that show a trend in volume, because without supportive volume, a price movement has no conviction.
  5. Investing

    Using Open Interest to Find Bull/Bear Signals

    Volume should inform your use of this indicator in confirming trends and reversals.
  6. Trading

    Tips for Stock Charts That Enhance Your Analysis

    Find out how to create well-designed charts that will enhance your market analysis.
RELATED FAQS
  1. What are the differences between a bar chart and candle sticks?

    Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply ... Read Answer >>
  2. Why is trading volume important to investors?

    Learn about trading volume, its importance and how investors analyze volume to confirm a trend or reversal in a security. Read Answer >>
  3. What's the difference between on-balance volume (OBV) and accumulation/distribution?

    On-balance volume and the accumulation/distribution line are similar in that they are both momentum indicators that use volume ... Read Answer >>
  4. How do I start using technical analysis?

    Technical analysis is a method of analyzing securities by evaluating current and historical price and/or volume activity. ... Read Answer >>
Trading Center