Weekly Charting - 13th April 2018, page-16

  1. 19,112 Posts.
    lightbulb Created with Sketch. 3682

    Yes, if a gap upbar that closed poorly, on really high volume like that, which came after a decent uptrend was already in place, would look climactic for sure.
    However, you would still expect to see some down bars in response (before they begin to 'hold it up' if they need to continue selling their position).
    As the downbars in response will illustrate the fresh new weakness caused by the overwhelming supply (selling) that was caused the poor close.

    If there were not any downbars at all following a bar and volume like that, even after a reasonable uptrend was already in place, you could only keep watching the subsequent bars to see what would happen.
    Downbars (in this case) will be a give away as to what has happened previously.
    So if the low of that initial bar was clearly taken out to the downside (closed below), it would be a telltale sign of previous selling.
    But if price only tested the initial bars low, or perhaps flirted with it for a while before recovering (and never closed clearly below it), and then saw price begin to grind higher again. I would call it as some form of (weird) absorption bar until proven otherwise -- and remember, while price is above any difficult to understand bars like that, 'they are out of play', so to speak, and dont need to be worried about until price comes back to that level again.

    cheers
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.