medium · Volume Price Analysis
A 'failed test of supply' occurs when the price is pushed into a former accumulation zone but returns on high volume.
Using the Law of Supply and Demand, why does this delay a potential bullish campaign?
- High volume proves that significant supply still exists in the market, meaning insiders must continue accumulating before prices can rise.
- The high volume indicates that insiders have decided to switch from accumulation to distribution.
- High volume proves that demand is too high, which would cause the price to rise too quickly for insiders to finish building their positions.
- The high volume signals that the market makers have lost control of the bid-ask spread.
Sign up free to see the explanation and track your rank →
More Volume Price Analysis practice
- A stock has been in a sustained uptrend for three weeks. A c… — How should this be interpr
- What is the specific VPA principle demonstrated here?
- During an accumulation phase, the price dips below the estab… — What is the correct Wyckof
- What is the most likely price behavior?
- What is the next step in the decision framework to confirm this is an entry opportunity?
- An up candle with a very narrow spread and very low volume a… — What does this specificall
- A practitioner is using a 233-tick chart for the ES E-mini.… — What does a 'low volume' ba
- A stock has reached the top of a distribution zone. A candle… — How should the practitione