easy · Volume Price Analysis testing
A trader identifies a congestion zone between $120 and $125. After a brief markup to $128, the price dips back to $125.10 with a narrow body and low volume.
What is the significance of the volume in this 'Test of Supply'?
- Low volume indicates a lack of institutional interest in the markup.
- The test has failed and the price will likely re-enter congestion.
- Low volume confirms that sellers have been successfully absorbed.
- High volume would confirm the support floor is strong.
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