hard · Volume Spread Analysis
Following a potential buying climax, the market undergoes an 'automatic reaction' lower.
What must occur on the subsequent rally to confirm that a distribution phase is firmly in place?
- The market must gap up on good news to trap remaining short-sellers before the final markdown begins.
- The rally should reach new highs on even higher volume to show professional commitment to the upside.
- The rally should move back toward the previous high on low volume and a narrow spread, indicating 'no demand' from professionals.
- The rally should produce a wide-spread bar on high volume closing near the highs to verify support.
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