medium · Volume Spread Analysis supply-demand-smart-money
A stock produces a wide-spread down-bar on high volume, closing on the low. Two bars later, the price recovers to the high of that down-bar on very low volume.
What does this 'effort versus result' scenario reveal?
- The low-volume recovery is a successful test of the down-bar's supply, signaling an imminent reversal to the upside.
- The recovery on low volume is 'no demand,' indicating that the previous selling effort was genuine and the trend remains bearish.
- The sequence is a shake-out, as the low volume on the recovery shows that professional buying has completely removed the supply.
- The high-volume down-bar was absorption volume, and the low volume on the recovery shows that all sellers are exhausted.
Sign up free to see the explanation and track your rank →
More Volume Spread Analysis supply-demand-smart-money practice
- When observing a 15-minute chart of a stock traded in London… — Why might a VSA practition
- Very bad news breaks for a major retail stock. Instead of th… — What is the likely objecti
- Why is the classification of 'Relative Volume' more important than 'Absolute Volume' when
- A 'No Demand' bar is identified by a narrow spread up-bar wi… — Why does this signal often
- The S&P $500 index drops 5% over a week. During this same pe… — What is this 'relative str
- Which of the following describes the behavior of 'Strong Holders'?
- An index has been rising for months. You identify a stock th… — What does this indicate?
- In the context of 'Smoke-Filled Room Syndrome,' why do multiple professional operators oft