hard · Volume Spread Analysis supply-demand-smart-money
A 'Composite Bar Analysis' is used when individual bars are ambiguous.
If you combine three narrow-range bars into one composite bar and it shows a wide range with a close near the high on high volume, how should this be interpreted?
- As 'No Demand,' because the individual narrow-range bars had spreads too small to meaningfully move the market alone
- As a sign of weakness, because the high volume total was spread thinly across too many separate days to carry real significance
- It indicates that a 'Mushroom Top' is forming, since the market repeatedly failed to break out decisively in a single trading day
- As a sign of strength, as the composite reveals a successful effort to rise that was masked by the smaller daily fluctuations.
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