medium · Volume Spread Analysis effort-vs-result-spread
An index has been trending in an upward channel. As price approaches the upper supply line, the daily bar shows a narrow spread with volume at 0.5× the 20-day average.
What is the most likely outcome for the next few bars?
- The price will likely fail to penetrate the line and move back toward the support line.
- The market is likely to gap up through the line on the following open.
- A massive breakout is imminent as the low volume shows the supply has been fully removed.
- The trend channel is invalid and should be redrawn using the most recent high.
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