Supply Entering the Market
Volume Spread Analysis glossary · Supply & Demand / Smart Money
Definition
A narrow-spread up-bar on high volume, ideally into new high ground, signalling the end of a rising market. The narrow spread shows that market-makers are capping the upside by selling into public buying—if they were bullish, they would have allowed the price to run on that volume. The close may be on the high, which actually makes the signal more significant because it shows professionals selling with maximum efficiency. The pattern is only valid after a substantial up-move; if an old top exists to the left at the same level, the same bar may instead be absorption volume (strength)—the distinction is critical.
Supply Entering the Market in plain English
When a rising stock makes a fresh new high on HEAVY volume but the bar is unusually short—barely taller than a normal bar—something's off. Big volume means huge activity, so if the buyers were really winning, the price should have surged far; the fact that it barely moved means the market-makers are quietly SELLING into all that buying, capping the price like a lid on a boiling pot. That's supply entering the market, and it warns a rise is running out of gas. One catch: this only counts after a solid, long climb—if there's an old peak sitting at the same price to the left, that very same bar might instead mean big players are BUYING up everything for sale (a sign of strength), so which one it is matters enormously.
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