hard · Volume Price Analysis
A failed test of supply (high volume) is often followed by a 'shakeout.'
How does the volume on the shakeout bar help the practitioner decide if the market is finally ready for markup?
- A shakeout on low volume is an anomaly that suggests the insiders have lost interest in the stock.
- The shakeout must occur on ultra-high volume to prove that insiders are serious about the move.
- If the shakeout occurs on low volume, it confirms that the supply found during the failed test has finally been absorbed.
- The volume on a shakeout is irrelevant; only the depth of the lower wick matters.
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