medium · Volume Profile Analysis profile-anatomy

A trader observes that the Value Area has migrated downward for three consecutive days. On Day 4, the Value Area overlaps with Day 3's Value Area.

According to the 'Value Migration' framework, what does this signify?

  1. The market is in an 'Open Drive' state because value is no longer moving.
  2. A bullish reversal is imminent because the 'Three Day Rule' has been completed.
  3. The bearish trend is exhausting and the market is entering a state of balance.
  4. The bearish trend is accelerating because overlapping value provides a 'launchpad' for the next leg.

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