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 that the market is in a 'no demand' state and is likely to fall further.
- 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 waiting for higher prices to begin their own accumulation.
- It reflects a lack of professional interest in the stock, meaning it will likely trade sideways indefinitely.
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