hard · Volume Price Analysis Climactic Price Action & Reversal Dynamics
A trader compares two down candles from unrelated downtrends. Candle A has a wide spread, closes near its low, and appears on volume double the 20-day average. Candle B has an identical wide spread and also closes near its low, but appears on volume only slightly above the 20-day average.
Why is Candle A the stronger candidate for a genuine Buying Climax bottom compared to Candle B?
- Its close near the low is, entirely on its own, always the single defining feature of any genuine climax candle.
- Its volume is disproportionately large for its spread, implying quiet absorption of supply by insiders beneath it.
- Candle B's smaller volume premium instead proves that it must sit within a materially stronger, healthier downtrend.
- Neither candle can truly qualify, since a genuine climax must always close near its high rather than near its low.
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