medium · Volume Price Analysis validation
A 'Long-Legged Doji' appears on a 5-minute chart during a news event. The volume bar is well below the average.
How should a VPA practitioner interpret this candle?
- As a validation of intense market indecision between bulls and bears.
- As the start of a price waterfall due to the extreme volatility.
- As a successful test of demand that confirms an imminent price drop.
- As an insider 'stop-hunt' trap rather than a genuine reversal signal.
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