Hot Copper Charting and Chat, page-7

Yes, merging bars together like that can be a big help in picturing the price action.

Merged together like that - it shows that very strong demand (buying) has emerged to support the stock.
Strong buying like that is often enough to stop a downtrend and knock price into a sideways trading range or accumulation zone. (this is known as 'stopping action' in Wyckoff lexicon, and 'stopping volume' in VSA).
This is not confirmed as yet, but is well worth watching now to see how it develops.

What is shown is a potential two bar reversal, or bottom reversal (sort of like a shakeout).

That horizontal arrow is to mark the high of the initial downbar. This is marked because if price is able to recover all of the lost ground and close back 'clearly' above it, the price action can then be considered potentially bullish (it can also depend on where the surrounding support/ resistance zones are).

In a nutshell, you can generally consider the high of widespread (high volume) downbar as a level where the price action confirms as bullish when price reverses and is clearly exceeded (and when price is trading within the spread or range of the initial downbar bar it is 'roughly' neutral, and when the low is broken it shows ongoing downside follow through.

Theoretically, it does not matter exactly how long it takes to exceed these levels, but personally I don't like to wait too long.



Finally, as is usually the case in VSA/Wyckoff, there is a mirror image opposite worth noting.
So consider a widespread (high volume) upbar. The low becomes the line in the sand for a reversal (just like the high in the bottom reversal), inside bars are neutral, and exceeding the highs see upside follow through.

cheers