Page 78 - A Complete Guide to Volume Price Analysis: Read the book then read the market

Fig 7.15 Congestion Entrance - Bearish Trend

At this point we now have our ceilings and floors clearly defined, and as the market moves further into congestion, we see further pivot points to the
upper and lower price levels, which adds further reinforcement to these areas. What happens next?

At some point of course, the market finally breaks out from these regions, and this is the trigger that we have been waiting for, either to confirm the
continuation of a current trend, or to signal a reversal.

However, throughout the price congestion phase we are constantly looking for clues and signals using our VPA knowledge to confirm weakness or
strength as the market moves sideways. Moreover, if the congestion phase has been created as a result of a buying or selling climax, then the
signals will be very clear.

But, the signal we are constantly watching for now, once we are in a congestion phase, is the volume associated with any breakout and consequent
strong move away from this region. As we have already seen, congestion areas, are densely populated areas, with traders locked in a variety of
weak positions, and therefore any break away from these areas requires volume, and generally lots of it. A break out from such a price area on low
volume, is a classic trap move by the insiders, and is often referred to as a 'fake out'.

The insiders are trying to trap traders on the wrong side of the market once again, and a break out from recent congestion is another classic
strategy. Only VPA traders will be aware of such a false move, since the volume associated with any move higher or lower will be clearly visible.
This is why these price regions are so important and they are important for three reasons :

First, if we have a current position in the market, and we see a breakout validated in our direction, then this is a VERY clear signal of a continuation
of the move, and therefore gives us confidence to hold the position.

Second, if we do NOT have a current position, then this gives us an excellent entry signal, once the move away has been validated with volume.

Third, if we have an existing position and the trend reverses against us, then we have been given a clear signal to exit.

Finally, once the market has broken away from these regions, we then have clearly defined platforms of future price regions, which then come into
play as both support and resistance. These are immensely powerful and helpful in giving us simple targets for managing and exiting positions,
based on the price action on our charts. If you remember back to something I wrote earlier; getting in is easy, it's getting out that is always the