medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
In the context of accumulation, what is the specific purpose of a 'test of supply' (a bar dipping into lower ground and closing on its high on low volume)?
- To allow weak holders a final opportunity to exit their positions at break-even before markup begins.
- To verify if floating supply remains by probing lower prices to see if sellers will respond.
- To increase the volatility of the stock and attract speculative retail interest.
- To trigger the buy-stops of trapped short sellers and create artificial upward momentum.
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