hard · Volume Spread Analysis background-trend-context
A stock has been trending down for three months on a background of generally rising volume into weakness. In the last two weeks, down-bars have started closing well off their lows on volume that is noticeably lower than the down-bars from a month earlier, while up-bars remain unremarkable.
What does this shift in the background tell a practitioner about the trend context?
- The downtrend is accelerating as sellers press their advantage into a thinning market.
- Supply is drying up on down-bars, and the background is shifting toward a stopping action.
- The stock is entering a new, more violent leg down driven by climactic institutional selling.
- Nothing has changed, because only the behavior of up-bars can reveal a genuine background shift.
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