Lesson / WY-02-12
To assess supply absorption, compare downward distance and volume each time price returns to support. Active trading with increasing difficulty breaking the prior low supports the view that selling is being met. A subsequent rally through local resistance is needed to further establish that this buying can change the short-term direction. If rallies remain brief and closes keep moving lower, supply may still dominate. Contract rolls and similar factors can also concentrate trading, so confirm that contracts and sessions are comparable.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
7 lessons · Chapter contents
01Tests: What Is Being Examined, and Where?↗02Supply Tests and Demand Tests↗03Absorption: Active Trading with Little Further Progress↗04Exhaustion: Declining Activity and Diminishing Progress↗05Assessing a Lack of Supply or Demand↗06Reactions and Follow-Through: Testing the Interpretation↗07Confirming Absorption and Exhaustion from Market Evidence↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
No matching captions.
A Fresh Look at a Single Candlestick
Understanding Volume
