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36 Posts.

14/09/17

21:00

Post #: 27229797
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Originally posted by Jako8557 ↑

Yes, Wednesday's bar infers weakness, but that weakness is only confirmed if there is 'clear' downside follow through in response.

Tuesday's bar is where price accelerated up and away from the recent congestion near the lows of the trading range, with a decent spread, on an increase in volume. This suggests that a decent proportion of the market participated in the rise in price. So, if price was then to close back 'clearly' below the low of Tuesday's bar, all of that 'participation' would have been wiped out. Demand would have been overwhelmed by supply. This would in turn place a negative influence over that particular price action.

And now with Wednesday's bar in place, if price was to close below the low of Tuesday's bar, it will have to show downside follow through in response to Wednesday's bar (which only 'infers' weakness so far).
So if that happened, both bars would be working in combination so to speak (which is what usually happens....as the price action unfolds, the story the chart is telling is revealed, and it usually makes good sense).

does that help ??

cheers

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Thanks Jako
What a brilliant explanation. That helps a lot. Thanks for taking the time to explain it

XJO Value at posting: 5,738.7
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0 Great analysis

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