hard · Volume Price Analysis validation
A stock has risen for several weeks. It then prints a narrow-spread candle on the highest volume seen in the entire advance, closing mid-range, at a level marginally above the prior day's high. The next session opens lower and closes with a wide-spread decline on volume nearly matching the prior day's record.
Taken together, what do these two sessions most likely represent?
- Two validated up days confirming the uptrend, since both occurred on well-above-average volume.
- A Buying Climax followed by continuation, since heavy volume at new highs always marks fresh accumulation.
- A Selling Climax sequence: day one shows supply absorbing demand, day two confirms the reversal down.
- A successful test of resistance, since the narrow-spread day proves buyers defended the new high successfully.
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