medium · Volume Spread Analysis supply-demand-smart-money
A practitioner observes a series of narrow-spread up-bars on high volume during a rally. Each bar closes in the middle of its range.
What does this suggest about the balance of supply and demand?
- Demand is overcoming supply, as the high volume shows professionals are aggressively pushing the market through resistance.
- Supply is entering the market, as professional selling is preventing the high effort (volume) from resulting in wider spreads.
- This is a sign of no demand, as the narrow spreads show that the public is not interested in buying at these levels.
- The market is in a mark-up phase with professional support, as the high volume confirms buyer commitment.
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