medium · Volume Price Analysis testing
In a validated downtrend, a pullback occurs that produces two small up candles. The volume on these candles is declining and remains below the 20-bar average.
What is the trade implication?
- Exit the short position immediately, since price is now making higher highs and higher lows
- Reverse into a long position because all selling pressure has clearly disappeared
- Hold the short position as the pullback lacks buying conviction and the trend is intact.
- The overall downtrend is being validated further by this low-volume pullback move
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