medium · Volume Spread Analysis effort-vs-result-spread
A practitioner observes a potential climax event. The subsequent reaction bar is an up-bar with a spread that is twice as wide as the climax bar, but the volume is only half as large.
What does this 'effort versus result' discrepancy suggest?
- The low volume confirms that the professional selling has been completely exhausted.
- The market is entering a mark-up phase where volume is expected to decrease as supply disappears.
- The move is not genuine as the wide spread (result) is not supported by the low volume (effort).
- This is a sign of strength, showing that the market can move higher with very little effort.
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