hard · Volume Price Analysis validation
A stock approaches a well-known resistance level for the third time in two months. On this third approach, the candle has a narrow spread, volume only 0.3x average, and closes mid-range just under the resistance line.
What does this third approach most likely represent?
- A validated breakout is imminent, since three touches of the same resistance level always precede a breakout regardless of the volume behind each touch.
- A test of supply showing diminishing selling interest at the level, which is a constructive sign for an eventual breakout rather than a rejection.
- A bearish anomaly, since any approach to well-known resistance on light volume proves large sellers are quietly building a short position.
- A meaningless repeat, since a third touch of the same level cannot add any new information beyond what the first two touches already showed.
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