medium · Volume Spread Analysis effort-vs-result-spread
You see a stock gap up into new highs following a long rally. The volume is high, but the price bar for the day is extremely narrow. This is often a sign that:
- Short sellers are covering their trapped positions in mass.
- The professionals are 'capping' the price by selling into the demand.
- A successful, low-volume test of supply has occurred right at the highs.
- The stock is entering a parabolic move with virtually no overhead resistance.
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