hard · Volume Price Analysis
A currency pair has tested a resistance level at 1.3250 three times over two months, each time retreating on wide-spread down bars with above-average volume. On the fourth approach, price pushes through 1.3250 on a wide-spread up bar with volume 2.8 times the 20-day average and closes at 1.3280. The following session opens at 1.3270, pulls back to 1.3248, and closes at 1.3265 on below-average volume.
According to Anna Coulling's VPA, how should a trader interpret the pullback session, and what is the implication for position management?
- The pullback below 1.3250 on the second session invalidates the breakout; the prior resistance has reasserted itself and the trade should be exited.
- The pullback to 1.3248 on below-average volume is a test of the newly converted support (former resistance). The lack of selling volume on the test confirms the breakout is genuine, and the area around 1.3250 can now serve as a stop-reference for long positions.
- The close below the breakout level on the second session signals a bull trap; price will likely reverse back toward the prior range lows.
- The pullback is irrelevant until the market prints a third session; two-bar patterns are insufficient for VPA conclusions at resistance-turned-support.
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