hard · Volume Spread Analysis background-trend-context
An index has been declining for three weeks. Today, a wide-spread down-bar appears on ultra-high volume, closing on the high of the bar. This is followed by three bars of narrow-range, sideways price action on average volume, which fail to produce any upward movement.
What does this 'negative response' suggest about the initial high-volume bar?
- The initial bar was stopping volume, but the lack of an immediate upward response indicates that supply remains high and the professionals are not yet ready to support a rally.
- The initial bar was actually a 'shake-out' in a strong background, and the sideways drift is 'no selling pressure' confirming the bottom is in.
- The initial bar was a selling climax, and the sideways movement represents the 're-accumulation' phase where the final supply is being absorbed.
- The ultra-high volume on the down-bar was actually professional selling, and the sideways bars are a 'test' that has already failed.
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