medium · Volume Spread Analysis background-trend-context
An index has been falling for two weeks. Today, a bar produces a wide spread down, ultra-high volume, and closes in the upper third of its range. The following bar opens flat and closes down on average volume.
What does this 'Negative Response' reveal?
- The move was a 'Shake-out' that successfully cleared all weak holders, as confirmed by the lower volume on the second bar.
- The index is in a 'Re-accumulation' phase and requires more time to build a cause.
- The initial high-volume buying was insufficient to arrest the supply, and the professionals who bought are now overwhelmed.
- The ultra-high volume on the first bar was 'Hidden Selling' disguised as stopping volume.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis background-trend-context practice
- Why is the 'Background' (previous activity) considered the most important factor when read
- A stock chart shows a 'low-volume test' at $38.50. The pract… — By shorting at this point
- A practitioner sees an 'up-thrust' (wide spread up, close on… — What does this 'negative r
- Suppose a stock is approaching a known resistance level. It… — How should a practitioner v
- After a period of distribution, the market attempts to rally… — What does this indicate?
- During a distribution phase, an up-thrust appears at the top… — How does this volume confi
- Does the current high-volume down-bar still represent a professional Shakeout?
- In the context of 'relative strength,' why would a stock that refuses to fall while the pa