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 failed to produce a result.
- Negative response to a signal; the lack of follow-through suggests the background is stronger than the bar indicated.
- Market rotation; the professional money is moving into a different sector.
- Supply swamping demand; the sellers are waiting for higher prices to enter.
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