easy · Volume Price Analysis
A stock breaks above a well-defined resistance level of 62.00 with a candle closing at 63.50. The volume is 1.1× the 20-period average. The next candle is a shooting star on 2.5× volume.
What should the trader do?
- Add to the long position because the high volume on the shooting star indicates institutional 'absorption' of sellers.
- Hold the long position, as the shooting star is merely a test of demand above $62.00.
- Move the stop loss to $62.00 and wait for the Value Area to expand higher.
- Exit any long positions and consider a short entry, as the breakout has been revealed as a trap.
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