medium · Volume Spread Analysis effort-vs-result-spread
An index rallies on $15 billion volume. The next day it rallies further on $10 billion volume, and the following day it rallies again on $7 billion volume. The spreads are narrowing each day.
What does this indicate?
- It shows steady absorption of supply as price advances into fresh territory.
- A lack of demand as professionals are not participating in the rise.
- It means no selling pressure exists, so the rally continues.
- It marks the start of a fresh parabolic mark-up move higher.
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