hard · Volume Price Analysis validation
Following a prolonged downtrend, a stock prints an extremely wide-spread down candle on volume 4x the average, closing at the session low with almost no lower wick. Two days later, a narrow-spread candle forms on volume roughly half the prior climactic bar, drifting sideways just below the climax low.
How should the second candle be read against the climactic bar that preceded it?
- It validates continuation of the downtrend, since the second candle still closes beneath the climax low.
- It is a successful test confirming the climax, as shrinking volume near the low shows selling has dried up.
- It is an anomaly, because a close at the low on record volume should have produced immediate strong upside, not drift.
- It signals a fresh selling climax is forming, since price is still probing below the prior extreme.
Sign up free to see the explanation and track your rank →
More Volume Price Analysis validation practice
- What is the interpretation?
- A stock is falling in a price waterfall. A candle forms with… — What is the 'effort vs. re
- A stock breaks above a three-week resistance level of $52.00… — How should a practitioner
- What is the most likely institutional activity occurring here?
- What VPA law is being applied?
- Which represents a 'Distribution' signature?
- Which of these scenarios represents a 'Validated' bearish trend move?
- An equity instrument has been in a sustained bullish trend.… — How should a practitioner i