These were the three bars (arrowed) which caught my eye on the SMN daily chart recently.
Note that each of these bars has pretty high volume, and all are wide'ish spread downbars......but in each case the next bar is up......which is not what would be expected if all that volume was just selling......so each must have had enough 'hidden' support within them, to cause a little supply vacuum (a temporary lack of sellers at that level), and this caused the next bar to close higher in each case.
Now I can't tell if this support is just speculative (for a short term trade), or if it is for the medium or longer term hold, but so far the positions appear to have been held.
Today's bar (Thursday's) was quite interesting.......firstly the gap over the previous high suggested 'intent' (a gap up is usually a good ploy to engage the greed emotion in stale holders, and encourage these holders to holders not to sell yet, with the hope of even higher prices.
And secondly, the spread was much narrower than the previous bar, especially considering the volume was much higher.......now usually that would suggest selling pressure of some sort is coming in (either profit taking from below, stale supply from the left, or short positions being set), and at this stage (keeping the gap up in mind), I expect it is an attempt at absorbing the stale supply from the left (marked in green). Subsequent trading will probably confirm.
Now....if the supply at this level is relatively manageable, the absorption process should mop it up without much technical damage, but if it becomes overwhelming (and too expensive to absorb), price may need to pull back and go through a shakeout process, in an attempt to remove that supply, before making another challenge to higher price levels.
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cheers
