medium · Volume Spread Analysis effort-vs-result-spread
A 'Two-Bar Reversal' (Bullish) shows a wide-spread down-bar on ultra-high volume followed by a wide-spread up-bar that closes above the first bar's high.
What was 'hidden' in the first bar?
- Massive professional buying was occurring intrabar as the price fell, which only became apparent when the market rallied the next day.
- They have switched from strong holders to weak, undercapitalized holders because of a lack of capital during a broad market crash.
- They have been trapped by a sudden decline and are now desperately dumping their remaining shares onto retail buyers.
- They have accumulated a large position and are now required to support the price to prevent their holdings from losing value.
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