hard · Volume Spread Analysis background-trend-context
An elite practitioner observes a stock trading in a range between 45 and50 for several weeks. Price dips to 44.20 on a wide-spread down-bar with volume lower than the prior 20-bar average, then recovers to close at49.10 by the end of the session.
What is the key distinction that separates this 'Spring' from a genuine breakdown?
- The background must already show a prior Buying Climax for this Spring to validate as a true reversal signal.
- The low volume on the penetration of support indicates that professional selling was absent during the move lower.
- The close in the upper third of the bar shows that demand has fully overwhelmed the floating supply near the low.
- The wide spread shows market-makers are aggressively bullish, marking the price up hard against panicked retail sellers.
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