medium · Volume Spread Analysis supply-demand-smart-money
During a 'test of supply', why is low relative volume considered a bullish sign?
- Low volume on a test indicates the market is in a lingering 'no demand' state and is therefore likely to fall much further from here.
- It indicates that there is no floating supply left to resist a mark-up, showing that professionals have finished their accumulation.
- It shows that the 'herd' has stopped selling and is now patiently waiting for higher prices before starting their own accumulation buying.
- It reflects a lack of professional interest in the stock altogether, meaning price will most likely just trade sideways indefinitely.
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