medium · Volume Spread Analysis background-trend-context
A stock at $85 gaps up to open at $89 on good earnings news. It has been rallying for months. The spread is narrow, and it closes at $88.20 on volume 5 times the average.
How should you classify this gap-up?
- A 'Weak Gap-up' and a terminal trap for breakout buyers.
- A 'Successful Test' of the liquidity at higher price levels.
- A 'Strong Gap-up' confirming professional commitment to higher prices.
- A 'Breakaway Gap' that signals the acceleration of the mark-up phase.
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