medium · Volume Spread Analysis background-trend-context
Why is the 'Background' (previous activity) considered the most important factor when reading a current bar's signal?
- The background is studied so a trader can forecast the news events that will move the stock.
- Reviewing the background is the only reliable way to calculate the current bar's relative volume level.
- The background pinpoints the exact price level and context where a protective stop-loss order should be placed.
- A signal like a 'test' is only valid if there is strength like 'stopping volume' in the recent background.
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