medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
A stock breaks support on Bar 1 with a wide spread and high volume, closing on the low. Bar 2 recovers immediately, closing back inside the range on a wide spread and high volume. Bar 3 is a narrow-spread bar that dips into the range of Bar 1 and closes near the high on very low volume.
How does this sequence resolve the ambiguity of Bar 1?
- The sequence reveals Bar 1 was a high-volume shakeout, confirmed by the absorption on Bar 2 and the lack of supply on Bar 3.
- The sequence indicates a redistribution phase because Bar 1 showed genuine selling pressure.
- The market is in equilibrium and requires a second selling climax to clear the volume from Bar 1.
- Bar 3 is a sign of no demand, suggesting the two-bar reversal of Bar 1 and 2 has failed.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis climaxes-tests-springs-upthrusts practice
- While observing a downtrend, you see a bar that dips into fr… — What does this indicate to
- A 'Failed Test' is identified when a price probe into a prio… — What does this signal to t
- What happens during a 'Shake-Out' (SOS 34) in a market that has been in a long accumulatio
- A stock has been in a markdown phase for weeks. Suddenly, a… — What is this sequence?
- What is the professional purpose of an 'Upthrust' (SOW 2) - a wide-spread move up that col
- What VSA signal has occurred?
- A practitioner sees a 'Hidden Upthrust' on a chart. Which of the following best describes
- Which bar pattern provides the best 're-entry' opportunity during a temporary pullback in