medium · Volume Spread Analysis climaxes-tests-springs-upthrusts
A 'Selling Climax' is traditionally followed by a period of sideways trading.
Why is an immediate V-shaped recovery considered 'unlikely' in standard VSA methodology?
- The 'herd instinct' driving crowd psychology needs at least 21 trading days to shift from a state of fear to a state of greed.
- Market-makers are barred by exchange rules from marking any price up more than 5% per day after a crash.
- Retail traders stay too 'locked-in' near the lows, and their steady selling pressure prevents any real upward movement.
- The professionals who absorbed the panic need time to 'test' the market and verify that supply is truly exhausted.
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