hard · Volume Spread Analysis effort-vs-result-spread
In a mark-down, a practitioner sees a wide-spread down-bar on ultra-high volume that closes on the low. This is followed by a narrow-spread up-bar on low volume.
What is the trade setup?
- Wait patiently for a spring to form beneath the low of that wide down-bar first.
- Buy the up-bar, since it marks the exact completion of a genuine selling climax.
- Cover every short position immediately, since visible absorption volume has now appeared.
- Short the up-bar because it is a no-demand bar confirming the selling pressure.
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