Anyone following the recent discussion on potentially 'bullish reversals' might be interested to see one 'in the real world'.
On the chart below, Daily Short Sales (DSS) are in red pushing down, and are in the same scale as normal volume in blue (pushing up - scale to the right).
On top of DSS is the cumulative volume for each price wave (up light blue, down light red).
Short Interest is the yellow area chart, with its scale to the left.
Price Gaps (close to close) are the hollow part of a bar.
Prior to the interesting down wave which culminated in a bullish reversal right at previous support, buyers had gained control and appeared to be absorbing/accumulating stock as it moved sideways.
Then while price was already on a modest downwave, increased DSS were used to thrust price lower, potentially to shakeout any remaining supply from the market (which will clear the way - higher - as there is now reduced supply (selling pressure) in the market).
Notice at the same time, there was no increase in Short Interest (held short positions), in fact they continued to decline, so these short positions were covered same day or very quickly.
Once the reversal was complete (green box), price accelerated higher, moved above the highs of the range. Tested the highs and then accelerated higher and made a ~100% gain from the lows (price may now be coming down to re-test the highs of the range for strength - we'll see....)
