medium · Volume Spread Analysis background-trend-context
A stock chart shows a 'low-volume test' at $38.50. The practitioner waits 3 bars and sees the price at $37.90.
By shorting at this point, what principle of VSA is being applied?
- The negative response to a positive signal as a confirmation of dominant weakness.
- The principle of 'effort versus result' applied to a down-bar.
- The 'shake-out' principle, where the trader anticipates a further plunge.
- Relative strength analysis, comparing the stock to its parent index.
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