medium · Volume Price Analysis testing
A trader identifies a possible accumulation zone between $35 and $38. The price breaks above 38 on high volume but then pulls back to 37.50 on very low volume, forming a hammer-shaped candle.
What should the trader conclude?
- The trend has reached exhaustion and will reverse.
- The insiders are 'stop-hunting' at the range boundary.
- The breakout is confirmed by a successful test of supply.
- The move is a 'fakeout' because the price returned to the range.
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