easy · Volume Price Analysis validation

During a sustained downtrend in a futures contract, a narrow-spread bearish candle forms on volume that is 2.5x the recent average.

How should a practitioner interpret this specific signature?

  1. This is a 'no demand' bar, meaning the market is likely to keep falling from here.
  2. The downtrend is being validated by a fresh surge in aggressive selling conviction.
  3. Institutional insiders are buying to absorb the remaining retail selling pressure.
  4. The market is caught in a short squeeze and should reverse sharply and immediately.

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