medium · Volume Price Analysis climactic
A futures contract has been falling for weeks. It gaps lower at the open and trades down to a fresh low on the highest volume of the entire decline, then reverses to close near the high of a very wide-spread bar (a classic selling-climax down-day that closes up). Three sessions later price drifts back down to retest that climax low, but this retest prints a NARROW spread and dramatically LOWER volume, holding just above the prior low.
For Coulling, why does this second event materially strengthen the bullish case rather than merely repeat it?
- Because the low-volume narrow-spread retest demonstrates an absence of supply at the level the climax flushed out, confirming the smart money's absorption held and validating the reversal
- Because the retest on lighter volume proves sellers are exhausted only if price makes a lower low, and since it held above instead, this view treats the signal as inconclusive.
- Because a second visit down to the low on any volume level supposedly re-establishes support mechanically, the volume reading on the retest is treated as secondary to whether the level held.
- Because the lower volume on the retest instead signals that buyers have quietly stepped away from the level, warning that the rally was merely a bull trap and the downtrend is likely to resume soon.
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