hard · Volume Spread Analysis effort-vs-result-spread
A practitioner is analyzing a 'Mushroom Top' distribution. They notice that every rally attempt is characterized by lower volume and narrower spreads than the preceding rally, while down-bars show increasing volume.
What principle does this illustrate?
- The 'Path of Least Resistance' has shifted downward due to a lack of demand and increasing supply.
- Professionals are 'Bag Holding' and will eventually mark the market back up.
- This is 'Falling Pressure', indicating that the market is dropping under its own weight without professional selling.
- The market is in 'Re-accumulation' and is testing the patience of weak holders.
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