medium · Volume Spread Analysis supply-demand-smart-money
If a low-volume 'test' bar appears in a market with significant distribution in the background and the price fails to rise within the next three bars, what principle is being demonstrated?
- The principle of effort vs. result, where the low volume shows that not enough effort was applied to move the market.
- A successful shake-out, as the sideways drift allows more weak holders to exit their positions before the move.
- The negative response to a positive signal, indicating that the background weakness outweighs the immediate bullish bar.
- The path of least resistance, which has shifted upward despite the lack of immediate price movement.
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