easy · Volume Spread Analysis effort-vs-result-spread
A practitioner notices that as a stock approaches a major resistance line, the volume increases and the spreads widen. This indicates:
- A failure to reach the line due to lack of demand
- Effort to penetrate the resistance, likely leading to a breakout
- The retail herd is panicking and selling at the resistance
- That the resistance line will hold and the price will reverse
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