medium · Volume Spread Analysis effort-vs-result-spread
The S&P 500 has been trending upwards in a channel. As it approaches the upper supply line, the spread narrows significantly, the volume drops to 0.6x the average, and the price closes in the middle of the bar.
What does the principle of 'Effort vs. Result' suggest about this situation?
- The low volume indicates a successful Test of the supply line, confirming a breakout is imminent.
- There is a lack of demand to penetrate the trend line, suggesting the supply line will hold and prices will rotate back down.
- The move is 'Falling Pressure' in reverse, indicating that the market is rising under its own weight and should be bought.
- The narrow spread shows that the professionals are 'capping' the price, which is a sign of strong absorption and a buy signal.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis effort-vs-result-spread practice
- During a market decline, a stock produces a down-bar on a na… — What does this 'No Selling
- Which of the following describes 'Falling Pressure'?
- A stock has been trading in a range between $40 and $45 for… — How would a practitioner ca
- An index has been rising steadily for three weeks. Today, th… — How should this activity b
- An equity is in a steady uptrend. Today, it produces an up-b… — What is the most likely pr
- What is the most likely scenario?
- A stock is rising on wide spreads and high volume. Suddenly… — What principle describes th
- An equity averages a daily volume of 1,000,000 shares. Today… — How should this volume lev