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Volume and reversal

  #4 (permalink)

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lexxmd View Post
Why do we have spike in volume and then reversal .... I get caught some times, I see huge volume going short and then when I expect it to pull back and continue it just keeps on going with out continuations in reversal. It happens offen , what is the theory behind it?

It's a typical rookie fault to place stops in standard places like above e.g. recent highs or below recent lows.
When you watch the DOM you will see a one-sided lack of bids/asks so that these levels are normally broken
with a vengeance. As soon as the stop avalance runs out of steam, the move deflates. As a chart result you
see a spike and reverse.

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