C. The range of this bar was smaller than the previous 2 bars. Volume was significantly lower. Perhaps this was a bit of a test to check supply by the CO, and whilst price at one point broke through support, at some stage it was able to recover to close within the support zone.
C- Arrowed
This was a narrow spread up bar on low volume.
In this timeframe it is not a test (although in a tighter timeframe there may have been some testing when price traded below the previous close)
A test is almost always a Down Bar (although it can be a level or an up bar, but ONLY IF the majority of the bar has traded Below the previous close)
I expect (guess), that any professionals stood aside on this day, to see what the supply would do-
- would it be desperate to sell and chase the buyer down
- or would it remain above
An upbar also offered some confirmation on the previous absorption theory, proposed above (although at the time some doubt would remain, as it appears the pro's stood aside this day).
D. Massive volume day again with price up 12.5%. However the close was midbar, representing a battle between the bulls and bears over the course of the trading day. Price closed above the support zone. Looking for follow up strength, otherwise the midbar close was indicating some weakness entering the chart. At this point a horizontal line could be drawn from the midpoint. Interestingly it would form both a support and resistance level for future prices.
D- Yep, the battle was on again.
Widespread upbar, closing in the middle, on a sharp increase in volume.
Firstly the decent volume confirms the bigger traders were back, and the decent volume on an upbar suggests that the bullish absorption theory maybe correct.
Yes, the mid bar close does indicate supply is still present above bar A's close (as should probably be expected)
I can see what you are saying about the line drawn from the close (midpoint), and yes a line drawn off the close of a bar like this, will often show where the delineation is between supply and demand (obviously, supply above, and demand below).
cheeers
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