hard · Volume Spread Analysis
If a market has reached a potential top and exhibits an up-bar with a narrow spread on high volume, but there is an 'old top' to the left at the same level, how does the interpretation change?
- The old top confirms that the current bar is a double-top reversal and should be shorted immediately.
- The bar might represent 'absorption volume' where professionals are buying supply from traders locked-in at the old high.
- The background 'old top' is irrelevant because VSA focuses only on the current relationship of price and volume.
- The narrow spread confirms that the 'resistance' from the old top is too strong for the market to overcome.
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