Supply Overcoming Demand
Volume Spread Analysis glossary · Supply & Demand / Smart Money
Definition
A two-bar pattern in which a high-volume up-bar closes off the highs and is immediately followed by a down-bar. The pattern shows that the first bar's high volume contained selling that overcame the buying—effort with no result. It typically appears after a period of rising prices as professional groups begin taking profits; with weakness already in the background it becomes very significant. Confirmation comes from a down-bar closing near its lows, with further weakness signalled by narrow-spread high-volume up-bars and up-thrusts.
Supply Overcoming Demand in plain English
Imagine a tug-of-war: one side (buyers) heaves hard on the rope, but instead of the flag racing toward them, it barely moves, proof that the other side (sellers) is secretly just as strong. That's 'supply overcoming demand.' You see it as one bar where price rises on huge volume but closes off its high, and the very next bar drops. All that buying effort produced almost no lasting gain because hidden professional sellers were unloading into the crowd. After a long rise it's a quiet warning that the smart money is cashing out, and it's confirmed when a following down-bar closes near its lows.
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Practice Supply Overcoming Demand
You are observing a down-bar that closes in the middle of… What does this two-bar sequence suggest?
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