medium · Volume Spread Analysis effort-vs-result-spread
In a bearish two-bar reversal, Bar 1 has ultra-high volume and closes mid-range. Bar 2 is a wide-spread down-bar.
What is the significance of the mid-range close on Bar 1?
- It confirms that supply was already active during the upward thrust
- It suggests the market is 'overbought' and needs to rest
- It shows that the market is in a state of indecision before the next move
- It is a sign of absorption where market-makers are buying the sellers' stock
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