medium · Volume Price Analysis climactic
A market makes a buying-climax top on record volume, sells off, then rallies back to make a SECOND high that slightly EXCEEDS the climax high, but does so on visibly LOWER volume and a narrower spread.
What does Coulling's VPA conclude about this second, higher peak, and why is it more dangerous than the first?
- It is an up-thrust / false breakout above the climax high on declining volume, more dangerous because it traps breakout buyers above resistance while the smart money completes distribution into them
- It is a bullish breakout confirmed by the marginal new high, and the lighter volume simply reflects a naturally low-resistance path now that overhead supply has evidently cleared away
- It is a neutral retest that merely resets the trend structure, so the lower volume on this second peak stays irrelevant until price holds the breakout or later fails back under the climax high
- It is a second buying climax, and because successive climaxes are widely assumed to add cumulative buying pressure, two occurring back to back make sustained continuation higher the most likely eventual outcome
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