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 that professionals are 'Testing' the lows and the path of least resistance is still up.
- It confirms that the high volume on Bar 1 was primarily professional selling rather than buying effort.
- It confirms that a 'Shake-out' has occurred and the market is now clear of weak holders.
- It confirms that the market is 'Oversold' and a bounce is imminent.
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