medium · Volume Spread Analysis wyckoff-phases-schematics
A stock that has been rising for weeks produces a bar with an ultra-wide spread and ultra-high volume, closing on the highs. The news is overwhelmingly positive.
Why does the KomFi framework suggest this might be the 'End of a Rising Market'?
- The good news will attract too many 'Strong Holders', causing the market to become crowded and crash.
- The close on the high is a 'Trap' because the price should have closed in the middle to be a genuine markup.
- Excessive volume on an up-bar, especially on good news, often contains hidden selling as professionals use the euphoria to transfer their holdings.
- The wide spread shows that market-makers are marking the price up too fast, leading to an 'Oversold' condition.
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