easy · Volume Spread Analysis effort-vs-result-spread
A 'Successful Test' occurs when the price probes into a previous high-volume area and recovers on low volume.
What exactly is being 'Tested'?
- The accuracy of the market-maker's current bid and ask spread.
- The amount of 'floating supply' or selling pressure remaining at that price level.
- The level of 'hidden selling' that might exist in the options market.
- The strength of retail demand and whether they are willing to buy at higher prices.
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