medium · Volume Price Analysis

Coulling would warn this mechanical rule is dangerous primarily because it omits which essential contextual filter?

1. The background phase and trend context — a valid test for supply is only meaningful when the prior price-volume background is bullish (e.g., post-accumulation or within an established up-trend), otherwise the low-volume down-bar carries no continuation signal
2. The requirement that the down-bar also happen to be the single narrowest-spread bar among the last ten bars, an invented mechanical filter without which the rule claims no test can ever be considered valid, no matter what the surrounding volume shows
3. The need for the test to coincide exactly with a round-number price level, since this rule wrongly assumes institutional tests for supply only ever occur at psychologically significant round levels rather than at whatever prior support or resistance the structure actually sits upon
4. The rule that two consecutive low-volume down-bars are required before any test can be counted as confirmed, treating a single properly-formed low-volume down-bar closing off its low in a bullish background as statistically insufficient evidence entirely on its own

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