medium · Volume Spread Analysis wyckoff-phases-schematics
Following a potential buying climax, the market undergoes an 'automatic reaction' lower.
What must occur on the subsequent rally to confirm that a distribution phase is firmly in place?
- The market must gap up sharply on genuinely favorable news to trap remaining short-sellers before the final markdown phase begins.
- The rally should reach fresh new highs on even higher volume, clearly showing continued strong professional commitment to further upside.
- The rally should move back toward the previous high on low volume and a narrow spread, indicating 'no demand' from professionals.
- The rally should instead produce a wide-spread bar on high volume, closing near the highs to clearly confirm renewed support.
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