medium · Volume Price Analysis
An equity opens for the day with a large gap up on very low volume. The first 5 minutes produce a wide-spread up candle, but volume is 50% of the opening average.
What is the VPA practitioner's move?
- Wait; this is likely a 'Trap Up' move by market makers to test sentiment before committing capital.
- Enter long now; the gap up and wide spread clearly indicate strong bullish momentum today.
- Enter short; a low-volume gap up is treated as a reversal signal under the 'Gap Fill' strategy.
- Close all existing long positions; the persistently low volume proves the entire bull market run has now ended.
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