medium · Volume Spread Analysis effort-vs-result-spread
An index has broken through its lower trend channel line on wide spreads and high volume. It then rallies back to touch the line on very low volume.
What does this confirm?
- The trend channel line was drawn incorrectly using the wrong prior swing high and needs redrawing.
- A Buying Climax on very high volume and wide spread is imminent at new highs
- The breakdown was genuine, as there is 'no demand' on the rally back to the break-point.
- The breakdown was a shakeout, and low volume proves that all the sellers have vanished.
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