Page 52 - A Complete Guide to Volume Price Analysis: Read the book then read the market

The insiders are happy to oblige, selling into the demand, moving the market lower, then back higher drawing in more demand, until they are close
to clearing their inventory.

At this stage the price action becomes more volatile with surges higher followed by a close back to the open price, with increasing volumes of
buyers flooding into the market, fearing they will miss out on the next leg up in the bullish trend. The next leg is in the opposite direction.

Finally, the inventory is cleared and the market sells off, moving lower and back out of the distribution phase. The clues for us, as VPA experts, are
there to see.

Here we will see high volume coupled with a candlestick which has a deep upper wick and narrow body, and is one of the most powerful
combinations of price action and volume we will ever see on a chart. Naturally, I will be covering this in detail later in the book.

These are the 'upper wick' candles that we looked at in chapter 3, and as I explained there, they are immensely powerful and reveal so much,
particularly when combined with volume. The insiders are having one last effort to clear their inventory and mark prices higher early in the session.
Buyers flood in, taking the market higher, fearful of missing out, with high or ultra high volumes, before the insiders take the market lower to lock
these traders into weak positions, helped lower by profit taking. Some traders will sense that the market is 'over bought' at this level.

This price action is repeated several times, with the insiders selling into the demand, each time the price is pushed higher, before closing the
candle lower at or near the opening price, helped by profit takers closing out.

The colour of the body of the candle is unimportant. What is important, is the height of the wick, the repeated nature of this price action, and the
associated high volumes. This is sending a clear signal that the market is ready to move fast, and as the warehouses are all empty, the reaction will
be quick. The insiders are now jumping on their mats, and heading off down the helter skelter, back to 'square one' to begin the process once again
with an accumulation phase. When we see this price action, following a distribution phase, it's best to be in front of your screen – ready and waiting!
Now let's look at the opposite of the selling climax, which is the buying climax. This is the firework party that marks the end of the accumulation
phase, and signals the start of the bullish trend higher.

Fig 5.17 The Buying Climax – Firework Show ( Again!)

The buying climax is simply a selling climax in reverse. The insiders have taken the market lower, panic has been triggered and fearful sellers are
closing positions. See Fig 5.17.