medium · Volume Price Analysis testing
During a mark up phase, if the price enters a 'Congestion Zone,' how does a VPA practitioner distinguish between 'Re-accumulation' and 'Distribution'?
- Re-accumulation is characterized by prices steadily rising while overall volume keeps falling away.
- Re-accumulation shows declining volume on down-moves within the range and successful low-volume tests of supply.
- Distribution instead shows narrow-spread down candles trading on unusually low volume near the top of the range.
- Distribution features hammer candles forming right at the floor of the range, deliberately meant to trap sellers there.
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