hard · Volume Price Analysis validation
During a downtrend, a bar prints a very narrow spread and closes mid-range on ultra-high volume — the heaviest in two months — yet the next bar fails to extend lower and instead closes higher. A second analyst argues the narrow-spread/high-volume bar is merely an anomaly to be ignored.
Applying Coulling's framework rigorously, why is that dismissal wrong?
- The bar is pure noise because a narrow spread always signals mere indecision by itself, so the accompanying ultra-high volume stays irrelevant until a later wide-spread bar finally confirms the true direction
- The narrow spread on extreme volume is the validating signature of absorption — heavy selling met by equal or greater buying that capped the move down, and the higher close that follows confirms demand overcame supply
- The bar should be discarded entirely because a narrow spread on extreme volume only ever carries meaning at market tops, where it classically signals a buying climax, and it never applies near a downtrend's actual bottom
- The extreme volume validates continued downtrend momentum going forward, since printing the single heaviest volume seen in a full two months of active trading clearly proves the sellers still firmly retain control of price
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