medium · Volume Price Analysis testing
During a distribution phase, the insiders execute a 'Test of Demand.'
What does a 'Failed' test of demand look like and what are the implications?
- A hammer candle forming at the very bottom of the range on low volume; this indicates supply has been fully exhausted.
- A shooting star candle appearing on very low volume; this indicates the insiders have successfully cleared the market of remaining eager buyers.
- A wide-spread down candle appearing on ultra-high volume; this indicates that the actual markdown phase has quietly and decisively begun.
- An up candle that pushes into the distribution zone on high volume; indicates buyers are still present and the markdown is delayed.
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