medium · Volume Spread Analysis effort-vs-result-spread
A 'Two-Bar Bullish Reversal' shows a wide-spread down-bar on ultra-high volume followed by a wide-spread up-bar closing above the first bar's high.
What was the 'hidden' reality of the first bar?
- The first bar was a genuine breakdown, and the second bar was merely a temporary trap up-move.
- The market-makers were completely absent during the first bar, allowing retail panic alone to dominate the volume.
- The ultra-high volume on the down-bar was actually massive professional buying hidden by the price action.
- The high volume on the first bar was due entirely to short sellers rushing to cover their open positions in a hurry.
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