hard · Volume Spread Analysis effort-vs-result-spread
Two up-bars both close on their highs with identical wide spreads. Up-bar X occurs on the first push out of a long accumulation base; up-bar Y occurs after an extended markup, several bars into new high ground. Up-bar X prints high volume; up-bar Y prints even higher, climactic volume.
Applying effort-vs-result reasoning to CONTEXT rather than the bar in isolation, why can the same 'wide spread, high close, big volume' footprint be bullish on X but a warning on Y?
- On X the high volume is demand overcoming light supply, while on Y the climactic volume into new highs likely marks supply entering against exhausted demand.
- On Y the higher volume is simply stronger confirmation, so Y is more bullish than X and the footprint carries the same meaning in both locations.
- The footprints differ only because Y's spread, though equal in points, is a smaller percentage move at higher price, weakening the result.
- On X the wide spread proves professional support, whereas on Y the identical spread proves the same support has merely grown stronger with price.
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