Secondary Text

It is characterize as price movement, aiming to test the level of climax, but only lower volume and narrow range candles.
  • Sometime price will fall short of the climax (pull back).
    sometimes it will test the level of climax exactly (double top/bottom).
    And sometime it will surpass the level of climax (Bear/bull trap).
  • These differences indication, of underlying (determine) the strength of the market players.
  • The secondary test characterized after the reaction event, so we can say it ends the Phase A
  • Important:
    However, the secondary test can happen in Phase B and they represent a challenge to trader because some time they produce minor FBO's.
  • Generic Test:
    In key moments of accumulation or distribution process, a valid test will display low volume, while a failed test would display relatively high volume.
  • Failed Test:
    The test of the price level, where there is a lack of interest from the side of well informed traders.
The reason of the low volume in a valid test is because the well-informed traders have already absorbed all the orders(at the point of climax, maybe).
We have to analyze the test in form of VSA (volume separate analysis).
  • In other words to know if a test is successful or not, we need to analyze the price in alignment with the volume.
  • In this context, we are looking for, no demand or no supply candles.

No Demand Candle

A no demand candle is a narrow range bullish candle with a low volume than the last two candles. We can expect selling after that.

No Supply Candle

A no supply candle is in narrow range bearish candle with low volume than the last two candles. We can expect buying after that.
Note: No demand or no supply means a lack of interest in the corresponding direction.
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