hard · Volume Spread Analysis supply-demand-smart-money
During a markup, two consecutive up-thrust-like bars appear at resistance: Bar A is wide-spread, closes off its high, on very high volume; Bar B (next day) is narrow-spread, closes near its high, on very LOW volume. Many readers call Bar A the bearish signal. A senior Wyckoffian argues Bar B is the more damning evidence of distribution being complete.
What is the second-order reasoning?
- Bar B's narrow spread and low volume at the same resistance show that demand can no longer lift price even slightly — confirming Bar A's supply was absorbed buying and that the float has already been distributed, so no demand remains to defend higher
- Bar B's near-high close on low volume is a fresh sign of strength that contradicts Bar A, so the distribution thesis should be abandoned
- Bar B's low volume simply means the market is resting, so it carries no diagnostic weight and Bar A remains the only valid signal
- Bar B confirms accumulation because low volume after a high-volume bar always indicates supply has been removed from the market
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