hard · Volume Price Analysis testing
During an established trading range, price probes below the range floor by a small margin on volume 2.1x average with a wide spread, closing back inside the range near the top of the bar. The very next bar is a narrow-spread bar with volume only 0.3x average, drifting sideways just above the floor.
What does the second bar add to the interpretation of the first?
- It confirms the first bar was a genuine breakdown, since the drift on low volume shows sellers are simply resting before the next leg down.
- It is irrelevant, since the first bar's high volume and close back inside the range already fully confirms a spring on its own.
- It confirms the shakeout, since the absence of renewed selling pressure at the lows validates that supply has dried up after the spring.
- It contradicts the first bar, since low volume this soon after a violent probe means the spring failed and price will re-test the floor lower.
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