medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
When performing 'Composite Bar Analysis' on a week's worth of sideways price action, you sum the volume and find it is 2.5 times the average, yet the composite spread is very narrow and the close is in the middle.
What does this 'effort versus result' mismatch suggest?
- The 'path of least resistance' is clearly still upward, since the price flatly refused to break down despite the surge in trading volume.
- Significant professional activity is occurring, but the 'effort' (volume) is producing no 'result' (price move), indicating a transfer of stock.
- This is a 'failed test', and the market will most likely fall back to find a lower level where trading volume finally contracts again.
- The market is simultaneously showing 'no demand' and 'no supply' at once, producing an extended stretch of total inactivity across the trading sessions.
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