medium · Volume Price Analysis vpa-core
A currency pair has been in an uptrend for three weeks. You identify a candle with a small body near the high and a long lower wick (at least twice the body length) appearing at the current peak. Volume is 1.8× the 20-period average.
What is the primary risk of entering a long position here?
- The candle is a 'No Demand' bar, showing buyers have completely withdrawn from the market.
- The high volume on this lower wick represents a successful, well-absorbed test of supply at the trend's peak.
- The candle is a Hanging Man, signaling that significant selling pressure has appeared in the rising trend.
- The candle is a Hammer, which always indicates a bullish continuation, no matter where it appears.
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