medium · Volume Spread Analysis supply-demand-smart-money
An index has been rising. On Friday, it gaps up to new highs following a positive earnings report from a major constituent. The bar has a narrow spread, closes in the lower third, and volume is 3.5 × the average.
What is the professional diagnosis?
- Absorption Volume, as the market is clearing out the last of the short sellers.
- A 'Weak Gap-Up' representing distribution into retail FOMO.
- A 'Strong Gap-Up' designed to bypass a resistance area.
- Professional Support, as the high volume shows the 'strong holders' are defending the gap.
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