hard · Volume Spread Analysis supply-demand-smart-money
An index has been in a bear market for 6 months. It produces a wide-spread down-bar on the highest volume seen in years, closing mid-bar. The following week, the price trades in a narrow range on very low volume.
What is the practitioner's 'Checklist for Going Long' status?
- Short the next rally, as the high volume on the down-bar confirms extreme selling pressure.
- The background is still weak due to the 6-month trend, and the low volume shows 'no demand' for a rally.
- Immediate entry is required because 'stopping volume' has been confirmed by the low-volume bar.
- Strength is in the background (selling climax), and the low-volume week is a sign of 'no selling pressure'; prepare for entry on a successful test.
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