medium · Volume Spread Analysis wyckoff-phases-schematics
An index is making lower highs and lower lows. You see an up-bar with a wide spread and ultra-high volume, but the next day the market gaps down and makes a new low.
What does the 'Effort versus Result' principle tell us about the high-volume up-bar?
- This was a 'Selling Climax' bar, and it is now in the process of being 'Tested'.
- The market is in a 'Shake-out' phase, so you should buy into the gap down.
- The effort to rise failed, proving the high volume was actually 'Hidden Selling'.
- The market is 'Strong' because it keeps attracting high volume on its rallies.
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