medium · Volume Price Analysis
A stock has risen for five consecutive days. On Day 5, the price makes a new high, but the volume is 40% lower than on Day 2.
What VPA term describes this, and what is the trade implication?
- Volume-Price Divergence; the uptrend is exhausted and vulnerable to a sharp reversal.
- Effort-Result Balance; the move is healthy because it requires less effort to maintain momentum.
- Low-volume test; the insiders are checking for sellers before making the next push higher.
- Bullish Validation; the lack of volume shows there is no supply to stop the advance.
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