medium · Volume Price Analysis climactic
A trader monitors the S&P 500 E-mini futures (ES) and sees three candles. Candle 1 is average. Candle 2 shows rising volume and a wider bullish spread. Candle 3 has the highest volume of the day but a bearish spread of only 1.5 points.
What is the most likely institutional action on Candle 3?
- Insiders are selling into the rally, absorbing the buyers' effort to create a distribution top.
- The market is resting in a 'No Supply' state before the next leg higher.
- Institutional traders are adding to long positions, creating a 'power bar' for continuation.
- Market makers are clearing out stop-loss orders before continuing the markup.
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