hard · Volume Price Analysis climactic
Two stocks each stage a sharp multi-week decline. Stock A's final down candle has ultra-high volume, a wide spread, and closes at its low with no wick. Stock B's final down candle also has ultra-high volume and a wide spread, but closes with a lower wick covering most of the range.
Which stock more likely marks a genuine low, and why?
- Stock A, because a close on the low under record volume shows sellers are fully in control at the extreme.
- Stock B, because the large lower wick under record volume shows buying absorbed the decline before the close.
- Both equally, since ultra-high volume alone is sufficient evidence of a climax regardless of where the candle closes.
- Neither, since a genuine low requires several closes above the opening price before any conclusion can be drawn.
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