hard · Volume Spread Analysis supply-demand-smart-money
A practitioner identifies 'stopping volume' followed by a 'successful test' on a daily chart. However, the market fails to move up over the next 5 bars, instead drifting sideways on narrowing spreads and very low volume.
According to the principle of 'Negative Response,' what is the most likely outcome?
- The successful test was actually 'no demand,' and the market is preparing for a new leg of the mark-down.
- The low-volume sideways drift is 'bag holding,' confirming that the professionals are finished with their accumulation.
- The market is too weak to respond to strength signals, indicating that the background is still dominated by supply from an earlier distribution.
- The sideways move is a 'trap down-move' designed to shake out the final weak holders before a massive rally.
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