hard · Volume Spread Analysis effort-vs-result-spread
How does the principle of 'Effort versus Result' apply to a market that produces a wide-spread up-bar on ultra-high volume but is followed immediately by a wide-spread down-bar closing below the previous bar's low?
- The down-bar is a 'shake-out' designed to trap short sellers before the high-volume effort resumes and drives on to new highs.
- The high-volume effort ensures that the uptrend will eventually resume once this temporary reversal has fully run its course and settled.
- The effort to rise on high volume produced no lasting result, as the immediate reversal confirms the volume was professional selling.
- The two bars simply cancel each other out in net terms, leaving the market in a neutral, directionless state of overall equilibrium and balance.
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