Good Question.....
1-
A normal generic 'test' generally has a narrow spread, where a 'violent test' (or shakeout) will generally have a much wider spread.
In the real world, a normal test will see price sweep lower, fairly gently, and is generally only a brief shallow pullback in price, and if supply is low, price generally responds higher.
Whereas a shakeout (a violent test) will often see price rammed down very quickly, with a wide'ish spread, triggering stops and causing some panic & mayhem within the market for a period, then almost miraculously the market settles down, and the price bought back to finish about level again.
The shakeout is used to stop hunt, and clear out the weak holders who will sell (or are selling) into a rise in price (thwarting the ease of movement to the upside).
2-
Now that is a tricky one, as it depends on your timeframe.
For instance, the trades I generally take last for a few days to a few months (mostly a week or two).
So I initially look at weekly and monthly charts, to get a feel for the past history, and what the major influences over the chart are at the time.
After that, I will switch to a daily chart, and if there are some tricky bars to understand, I might use a 4 hour or 1 hour chart to 'look inside' the daily bar.
If the chart has a serious selling event in the background, that negative sentiment will tower over the price action for some time to come.
The closer price is to that selling event, the more influence it will have (but time does heal to some extent, if price gets a long way away from it).
However, you will mostly (but not always) need to see some sort of decent buying event occur, to properly change the sentiment from negative to positive.
Then with a change to positive sentiment in the background, you can normally expect to see some sort of generic variation of the Wyckoff Accumulation and Distribution schematic (below). Although it should be noted that Wyckoff never mentioned Accumulation and Distribution in his writings, that came from Bob Even and Hank Pruden who were the main teachers in the Wyckoff Institute.
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I feel like I might be going a bit fast, are we understanding and remembering the concepts so far ??
I expected to get more questions.......
At a certain point I will have to start asking some questions back to you blokes.......
cheers
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