medium · Volume Spread Analysis supply-demand-smart-money
A practitioner observes a 'Spring' at the bottom of a potential accumulation zone. The price dips below the support level of 32.00 to31.40 but recovers to close at 32.20 on volume that is significantly lower than the previous two bars.
If the next bar opens at32.10 and closes at $31.80 on high volume, how should the practitioner respond?
- Maintain the stop at $31.40 and wait for the accumulation count to complete.
- Avoid or exit the long position as the spring has received a 'negative response'.
- Increase the position size as this is a 'test of the spring'.
- Buy the dip because the spring triggered stops, clearing the way for the mark-up.
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