medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
A stock breaks above a long-term distribution range on a wide-spread up-bar and ultra-high volume. The next day, the price opens lower and closes below the breakout bar's low. This is followed by a narrow-spread up-bar on volume lower than the prior two bars.
What is the sequence identifying?
- A Two-Bar Reversal (Bearish) followed by a No Demand bar, confirming the breakout was a 'Trap Up-Move'.
- A 'Shake-out' designed to flush weak shorts before the true markup begins.
- A 'Sign of Strength' push-through followed by a successful 'Test of Breakout', indicating a buy entry.
- A 'Mushroom Top' formation where professionals are gradually buying more stock than they sell.
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