hard · Volume Spread Analysis background-trend-context
A stock has spent four weeks in a broad trading range after a long advance. In the final week, price rallies to a marginal new high on the range, closes weak in the lower third of the bar, but volume is only average for the range.
Why should a Wyckoff analyst treat this weak close on average volume as MORE suspicious in this background than an identical bar would be inside an established downtrend?
- Average volume during any rally always confirms genuine demand, no matter what the prior trend context happened to be here.
- In an established downtrend, this same weak close on average volume would just reflect ordinary fading momentum, so context never changes its meaning at all here.
- Coming after a long advance, the new high needed only average effort to attract the last willing buyers, so supply is being absorbed with little resistance.
- After a prolonged advance, a new high failing on only average effort shows demand is genuinely exhausted, not merely resting.
- New highs occurring after any prior trend automatically qualify as upthrusts and need no further volume confirmation whatsoever at all.
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