Guess when you see a big bearish candle with a large size???
When you see high volume on a bearish candle, and then a rally occurs afterwards, it could be due to what is known as “absorption” or “accumulation,” where large buyers or “whales” buy aggressively during a decline, causing volume to rise without the price continuing to fall significantly. Some possible reasons for this include:
1. Accumulation by large players: Large investors may buy stocks or assets when prices are low, taking advantage of a panic or temporary pullback, resulting in high trading volume. Despite the decline, these large purchases may indicate preparation for a subsequent rally.
2. Eliminate weak orders: Often times, a rapid drop in prices occurs to attract more sellers and push weak traders out of the market, after which large buyers buy heavily, which leads to a subsequent rise in price.
3. Exhaustion of Sellers' Power: When there is a large trading volume during a decline but the price does not continue to fall sharply, it may indicate that sellers have exhausted their power and buyers are about to take control, causing prices to rise.
Therefore, high volume in a bearish candle may signal a shift in power between sellers and buyers, followed by a rally as buyers regain control of the market.
The opposite is true in the case of an increase and the presence of a large bullish candle with a large volume. It is possible that the big players are raising the price to sell the currency at a high price and lowering the price after selling to you, and you find yourself locked into a high price and your loss is large.
