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 'too perfect,' and the market is now waiting for a second shake-out to confirm the lows.
- The market-makers are 'churning' the price to confuse retail traders before the inevitable mark-up.
- The relative volume calculation was incorrect, and the 'low volume' was actually average for that time of day.
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