medium · Volume Spread Analysis supply-demand-smart-money
A stock is rising on expanding spreads and increasing volume. However, the volume becomes 'excessive' (e.g., 4 times the average) into new highs, and the next day the price falls.
What does this suggest?
- This is a successful test of the supply at new highs.
- The uptrend is gaining strength and will continue.
- The professionals are absorbing all remaining sellers.
- The high volume contained significant hidden selling (Distribution).
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