medium · Volume Spread Analysis wyckoff-phases-schematics
A stock is in a confirmed downtrend. It produces a bar that dips below the previous day's low and recovers to close on its high, but the volume is very low (RV = 0.45). Over the next three days, the stock trades sideways and fails to rise.
How should this 'Test' be evaluated?
- It is a confirmed 'Successful Test'; keep holding your long positions.
- It is a 'Negative Response to a Positive Signal', confirming continued weakness.
- This pattern qualifies as 'Bag Holding', implying professionals are now trapped in inventory.
- It is a textbook 'Selling Climax' since the dip occurred at a brand-new low for the move.
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