hard · Volume Price Analysis
During a downtrend, a bar prints a very narrow spread and closes mid-range on ultra-high volume — the heaviest in two months — yet the next bar fails to extend lower and instead closes higher. A second analyst argues the narrow-spread/high-volume bar is merely an anomaly to be ignored.
Applying Coulling's framework rigorously, why is that dismissal wrong?
- The bar is noise because narrow spread always means indecision, so the high volume is irrelevant until a wide bar confirms direction
- The narrow spread on extreme volume is the validating signature of absorption — heavy selling met by equal or greater buying that capped the move down, and the higher close that follows confirms demand overcame supply
- The bar should be discarded because high volume on a narrow spread only matters at tops, where it signals a buying climax, not at the bottom of a downtrend
- The extreme volume validates continuation of the downtrend, since the heaviest volume in two months proves sellers are still firmly in control
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