Study the chart below. Compare the movement of price and volume. Using the principle of Harmony & Divergence from Law 3, what would you expect to happen next?
Understand the Problem
The question is asking the user to analyze a provided chart's price and volume movements based on the principles of Harmony and Divergence from a specific law of trading. The user is expected to predict the potential next movement of the trend based on this analysis.
Answer
Trend reverses and goes lower.
The final answer is 'Trend reverses and goes lower.'
Answer for screen readers
The final answer is 'Trend reverses and goes lower.'
More Information
According to Wyckoff's third law, if there is a divergence between large volume and price movement failing to advance, this indicates a potential reversal.
Tips
A common mistake is ignoring the volume aspect. Volume divergence often signals a change in market sentiment, so it should be analyzed carefully.
Sources
- The Laws of Wyckoff - StockCharts.com - stockcharts.com
- Wyckoff Theory: Schematics, Accumulation and Distribution - citytradersimperium.com
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