medium · Volume Price Analysis climactic
A stock is falling in a 'price waterfall' with consecutive wide-spread down candles. Suddenly, a candle forms with a spread that is only one-third of the previous day's spread, yet the volume is the highest seen in the entire decline.
What is occurring?
- A continuation of the waterfall as sellers become increasingly desperate at lower prices.
- A 'trap down' move where market makers are marking the price lower to trick traders into shorting.
- A successful test of demand, confirming that the bearish campaign will accelerate.
- Institutional absorption of the selling pressure, signaling a potential accumulation floor.
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