hard · Volume Spread Analysis background-trend-context
A stock has been moving sideways in a range for several weeks. Bar 1 is a down-bar that probes below the prior three lows but recovers to close near its high on volume lower than the previous two bars. Bar 2 is a narrow-spread up-bar on even lower volume.
What should the trader do next?
- Short the market because Bar 2 is a sign of weakness.
- Place a buy-stop order at the high of Bar 1.
- Wait for a wide-spread up-bar on increased volume to confirm strength.
- Buy immediately on the close of Bar 1.
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
- Historical data shows that indices can make new highs long a… — Why does this 'Market Rota
- What is the resulting Background Score, and what does it imply for a potential long trade?
- 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?
- Does the current high-volume down-bar still represent a professional Shakeout?