medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
During a sharp decline on bad news, a bar appears with an ultra-wide spread down and record-breaking volume, but it closes in the middle of its range.
What is the professional's objective in this 'Selling Climax' scenario?
- To test the strength of the resistance levels above to ensure the mark-down can continue without interference.
- To drive the price lower to clear out all remaining buy-limit orders before a final liquidation.
- To absorb the mass panic selling of weak holders at discounted prices to begin a new accumulation campaign.
- To create a 'hidden up-thrust' that will trap anyone attempting to buy the bottom of the move.
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