medium · Volume Spread Analysis background-trend-context
A trader identifies a 'No Demand' bar. Within the next two bars, the market fails to move lower and instead closes higher on increased volume.
What principle does this scenario illustrate?
- The effort versus result principle; the low volume effort ultimately failed to produce any real result.
- Negative response to a signal; the lack of follow-through suggests the background is stronger than the bar indicated.
- Market rotation; the professional smart money is simply moving capital into a different market sector instead.
- Supply swamping demand; the sellers are patiently waiting on the sidelines for much higher prices before entering the market.
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