medium · Volume Spread Analysis effort-vs-result-spread
An experienced VSA practitioner identifies a successful test on a daily chart. However, over the next three bars, the price drifts sideways and slightly lower.
What does this 'Negative Response' reveal?
- The professionals saw the test but refused to buy, indicating that the background weakness is more significant than the test itself.
- The test was simply 'too perfect,' so the market now waits for a second shake-out bar to confirm that the lows will hold.
- The market-makers are 'churning' the price sideways in a deliberate effort to confuse retail traders ahead of the coming mark-up phase.
- The relative volume calculation itself was flawed, and the apparent 'low volume' on that bar was actually just average for that time of day.
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