easy · Volume Spread Analysis climaxes-tests-springs-upthrusts
A 'failed test' occurs when a downward probe is met with high volume.
What does this indicate to an institutional practitioner?
- The market is clearly ready to explode upward, since high volume alone shows strong buying interest.
- A short-sell signal is triggered immediately, without waiting for any further price or volume confirmation.
- Supply is still present in the market, and further testing or accumulation is required before a markup.
- The underlying price data must be corrupted or erroneous, and this entire test bar should simply be ignored.
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