medium · Volume Spread Analysis effort-vs-result-spread
A practitioner identifies 'Supply Overcoming Demand' through a two-bar sequence. Bar 1 is an up-bar on high volume that closes off its high. Bar 2 is a down-bar that closes near its low.
What does the 'Negative Response' of Bar 2 confirm?
- It confirms professionals are merely 'Testing' the lows here, so the path of least resistance still points upward.
- It confirms that the high volume on Bar 1 was primarily professional selling rather than buying effort.
- It confirms that a genuine 'Shake-out' has occurred, leaving the market clear of all its weak holders now.
- It confirms the market has become 'Oversold' at this point, making a bounce imminent.
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