medium · Volume Price Analysis wyckoff-laws
A stock trades in a narrow range for five hours on 60% of normal volume. At 2:00 PM, a news announcement triggers a wide-spread up candle on 5× volume.
How should the reliability of this breakout be assessed?
- Unreliable; 5x volume signals a blow-off climax, and the breakout should be faded here.
- Suspect; the tight range suggests insiders were quietly distributing shares to the public before the news hit.
- Highly reliable; the 'Cause' of the consolidation has produced a validated 'Effect' on the breakout.
- Neutral; any news-driven candle is automatically treated as a manufactured trap regardless of size.
Sign up free to see the explanation and track your rank →
More Volume Price Analysis wyckoff-laws practice
- What is the confidence level for a short entry?
- Which phase of the Wyckoff cycle follows 'Accumulation' and is confirmed by a high-volume
- What does the volume on the rallies indicate?
- What is the Wyckoff interpretation?
- A trader is analyzing a potential 'Triple Top'. Peak 1: high… — What does this progression
- Why do markets typically fall faster than they rise, and how is this reflected in the VPA
- A stock has declined from 80 to 60. At 60, you see a series… — What is the 'Cause' in this
- If a currency pair consolidates in a 150-pip range for 8 weeks on a daily chart, what is t