medium · Volume Spread Analysis supply-demand-smart-money
A stock produces an up-bar with high volume, but the spread is very narrow and it closes into fresh new highs after a long rally.
Why is this considered an 'End of a Rising Market' signal?
- The signal indicates that the stock has reached its 'Perceived Value' and will now trade at random.
- The narrow spread shows that there are no sellers, allowing the market to drift upward.
- The high volume on a narrow spread shows professionals 'capping' the price by selling into the demand.
- It is absorption volume, showing that professionals are buying up the final supply to move higher.
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