medium · Volume Spread Analysis supply-demand-smart-money
A practitioner observes a wide-spread down-bar on ultra-high volume that closes on the highs during a panic sell-off. The news is universally negative.
What is the most logical next step for an elite trader?
- Wait for a 'no demand' bar to confirm the trend has reversed to the upside.
- Wait for a low-volume 'test' to confirm that the selling has been fully absorbed.
- Short the next rally because the high volume proves there is significant supply.
- Immediately buy the market because the 'selling climax' has occurred.
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