hard · Volume Spread Analysis
An index has been in a steady decline for three weeks. On Monday, a wide-spread down-bar appears with volume reaching 2.4x the 20-day average, but the price closes in the upper 10% of the bar's range. On Tuesday and Wednesday, the market drifts sideways on average volume without making any upward progress.
What is the most professional interpretation of this sequence?
- The high volume on Monday confirms a Selling Climax, and the sideways drift is a standard re-accumulation phase that signals an immediate buy.
- The sideways movement on average volume confirms that the professionals have completely exited their short positions, making the trend neutral.
- Tuesday and Wednesday are 'No Selling Pressure' bars, which confirms that the mark-up phase has officially begun.
- The market is exhibiting a negative response to professional buying, suggesting that supply is still swamping demand.
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