medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
If a market produces a 'Shake-out' on bad news, but then fails to move higher within the next 2 to 3 bars, how should the practitioner adjust their thesis?
- The shake-out was successful, and the sideways move is just a 'test' of the professionals' resolve before the big markup.
- The market is simply 're-accumulating,' and the practitioner should hold their position as long as the shake-out low is not breached.
- The bad news was not significant enough to cause a reversal, so the practitioner should wait for even worse news to buy.
- This is a 'negative response to a positive signal,' indicating that the background weakness is more dominant than the apparent strength of the shake-out.
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