🤔 HOW TO Spot Anomalies: A Quick Example
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We can define anomalies as cases where candles and volume don't match.
Here's a quick example:
1) The first highlighted candle is bearish. The body is relatively narrow, and the volume is relatively low. Nothing wrong here.
2) The second highlighted candle has a much larger body, but it looks like there starts to be a mismatch with the volume, which is not so high compared to the previous day.
RED FLAG.
3) The third candle is bearish. The volume is higher, and the body of the candle is narrow.
The long lower wick might indicate the following: insiders tested the market. Initially, they didn't see enough interest from the market and brought the price up.
The market is somewhat interested but not ready to drive prices lower. Our intuition with the red flag was right. Chances are the next candle will be bullish, but if the volume doesn't support it, it will be just a momentary rebound.
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REMEMBER: Always DYOR!
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