medium · Volume Price Analysis testing
After a strong markup, price drifts back on three successive down-bars whose volume reads average, then average-minus, then well-below-average, reaching a prior congestion floor where a narrow-spread bar closes mid-range on the lowest volume of the entire pullback. A Coulling-trained analyst calls this a successful test of supply and expects continuation higher.
What is the single most important confirmation the analyst still requires before treating the test as validated?
- The very next bar must close up on volume that rises above the low-volume test bar, confirming buyers stepped in once supply was shown absent
- A genuine test bar must print the widest spread of the entire pullback move, making the unusually low volume stand out clearly against that wide price range
- A second, lower-priced test at a fresh low must occur on even lighter volume before any resumption of the uptrend can be trusted
- Volume on the test bar itself must actually exceed the average volume of the preceding three down-bars, which would prove demand absorbed the supply
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