Yes........ is can be a little counterintuitive, but in general the smaller springs often work much better than big fat springs.
I feel this is because a short sharp retest of support which sees a pretty much immediate response and recovery, reassures the market that support is present and strong.
Whereas, when price gets pushed much deeper below previous support before it can recover. It then appears it needed to call on more of the reserves to support the price in the face of the potentially serious selling pressure. This suggests that although price has recovered for now, it took some time to muster the recovery, and infers that if some more decent supply like that arrived, it may overwhelm the support, and a price breakdown would occur.
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Yes, in a way it is.
There was some serious buying in late May, which was followed by a sideways consolidation in a range.
This consolidation is basically 'absorbing' or mopping up as much supply as possible, and the up down (whipsawing) motion is repeated attempts to shakeout more supply. Apart from accumulation, this consolidation period is a process which is attempting to encourage holders who maybe inclined to sell, to do so now (usually at a loss), so as to remove overhead supply (because this is the supply which will thwart or suppress a breakout in the future).
It can be difficult at the time to know whether it is absorption taking place, or if price is just being 'held up' to sell into.......
Generally the signs of absorption are to first look for buying or some sort of reasonable support in the background, then there will often be a series of small higher lows which give the price action a 'pressing nature' towards the upside, and also there may be little groups of tightly clustered closes (where the absorption of supply is taking place). Finally, the lack of downside follow through, when it appears price is 'poised' to break down and push lower is often another sign supply is being absorbed.
On the SMN chart during that period, it was a very clear cut case....and it is not always as clear as that....and some times it is only in hindsight that you can look back and understand what was actually going on (which is exactly what the professionals want it to look like).
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