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 upward because the price refused to fall despite the high 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 likely drop to find a lower level where volume is lower.
- The market is in 'no demand' and 'no supply' simultaneously, leading to a period of total inactivity.
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