Demand Overcoming Supply
Volume Spread Analysis glossary · Supply & Demand / Smart Money
Definition
A subtle sign of strength detected on a down-bar where the close is off the lows and the volume pattern shows that buying is beginning to enter the market—the bar shows some support (close not at the low, low being held) despite the overall downward movement. On its own, this signal may be insufficient, especially in a strong downtrend; it requires confirmation from the next bar (which should be up) and supporting strength in the background. With weakness in the background, there may still be too much supply for a rally.
Demand Overcoming Supply in plain English
'Demand' just means buyers wanting in; 'supply' means sellers wanting out — so this term describes the early moment buyers start to outweigh sellers, even while the price is still falling. It's a subtle clue, not a flashing sign: a down-bar whose close is off the low, with the low being defended, hinting that buying is beginning to trickle in. Because it's so faint, you can't act on it alone — especially in a strong downtrend — you need the NEXT bar to close up and other signs of strength already in place. If the bigger picture still looks weak, there may simply be too many sellers left for any real rally to hold.
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Practice Demand Overcoming Supply
You are observing a down-bar that closes in the middle of… What does this two-bar sequence suggest?
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