hard · Volume Spread Analysis
How does the principle of 'Effort versus Result' apply to a market that produces a wide-spread up-bar on ultra-high volume but is followed immediately by a wide-spread down-bar closing below the previous bar's low?
- The down-bar is a 'shake-out' designed to trap shorts before the ultra-high volume effort leads to new highs.
- The high volume effort ensures that the trend will eventually resume once the temporary reversal is complete.
- The effort to rise on high volume produced no lasting result, as the immediate reversal confirms the volume was professional selling.
- The two bars cancel each other out, leaving the market in a state of neutral equilibrium.
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