medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
Following a sharp decline, a stock produces a down-bar that probes below the previous week's low. It recovers to close near its high, and the volume is significantly lower than both of the prior two bars.
What does this indicate to a practitioner?
- Stopping volume that arrests the current decline.
- A successful test showing that supply has been removed.
- No demand for higher prices among professional operators.
- A failed test that will require a further shake-out.
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