medium · 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' in clever disguise, and it clearly signals that the market is preparing for a fresh leg of mark-down.
- The low-volume sideways drift is simply 'bag holding,' confirming that the professionals have finished their accumulation campaign.
- 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,' a carefully engineered maneuver designed to shake out the very last of the weak holders before a massive rally begins.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis supply-demand-smart-money practice
- When observing a 15-minute chart of a stock traded in London… — Why might a VSA practition
- Very bad news breaks for a major retail stock. Instead of th… — What is the likely objecti
- Why is the classification of 'Relative Volume' more important than 'Absolute Volume' when
- A 'No Demand' bar is identified by a narrow spread up-bar wi… — Why does this signal often
- The S&P $500 index drops 5% over a week. During this same pe… — What is this 'relative str
- Which of the following describes the behavior of 'Strong Holders'?
- An index has been rising for months. You identify a stock th… — What does this indicate?
- In the context of 'Smoke-Filled Room Syndrome,' why do multiple professional operators oft