Page 36 - A Complete Guide to Volume Price Analysis: Read the book then read the market

Fig 4.16 Multiple Bar Anomalies In An Uptrend

Fig 4.16 is the first example, and here we have what appears to be a bullish trend, with the first narrow spread up candle accompanied by relatively
low volume. This is fine as the volume is validating the price and is in agreement. The second candle then forms and on the close we have a slightly
wider spread candle than the first, but with high volume.

From experience and looking back at previous bars, this appears to be an anomaly. With high volume we would expect to see a wide spread
candle. Instead, we only have a candle which is marginally wider in price spread than the previous candle, so something is wrong here. An alarm
bell is now ringing!

Remember Wyckoff's third law, effort vs result? Here the effort (the volume) has not resulted in the correct result (the price), so we have an anomaly
on one candle, which could be an early warning signal, and the alarm bells should now be starting to ring!

The third candle then forms, and closes as a wide spread up candle, but with volume that is lower than on the previous candle. Given the spread of
the bar, it should be higher, not lower. Another warning signal.

The fourth candle then forms and closes as a very wide price spread up, but the volume is even lower! We now have several anomalies here, on
candles two three and four.

Candle 2 Anomaly

This is an anomaly. We have a modest spread in price, but high volume. The market should have risen much further given the effort contained in the
volume bar. This is signalling potential weakness, after all the close of the bar should have been much higher given the effort. The market makers
are selling out at this level! It is the first sign of a move by the insiders.

Candle 3 Two Anomalies!

This is two anomalies in one. The price spread is wider than the previous candle, but the volume is lower. The buying pressure is draining away.
Second, we have a market that is rising, but the volume has fallen on this candle. Rising markets should be associated with rising volume, NOT
falling volume. This is also signalling clearly that the previous volume is also an anomaly, (if any further evidence were required).

Candle 4 Two Anomalies Again!

Again, we have two anomalies in one, and is adding further confirmation that the volume and price on this trend are no longer in agreement. Here
we have a wide spread up candle and even lower volume than on previous candles in the trend. Following the effort vs result rule, we would expect
to see significantly higher volume, but instead we have low volume.