Yesterday I bought United States Steel (X) @24.99. The stock gapped up on the open and I waited a retracement to enter in anticipation of a confirmation of the test candle appeared the day before. The stock closed the day on its highs although volume is lower than the test candle, not an ideal confirmation since it could signal a lack of demand this high. There is the possibility that the stock will go lower again but for the moment the bias seems on the upside. This is the detailed technical analysis:
1 - A sign of accumulation: high volume candle with a narrow spread that touches new lows but closes on its highs. The next candle closes lower and signals that there are still sellers
2 - A long spread candle on ultra high volume that closes in its lows. Next candle touches new lows but closes higher so the volume on the previous candle wasn't selling: another signal of accumulation
3 - Ultra high volume after earnings and the candle closes in its middle: this could be a signal of a change in the supply/demand dynamic of the market. Since the candle closes in its middle, the market needs to find out how much sellers are still present
4 - This is a low volume test of supply in the body of the "earnings candle". The next candle closes higher although volume is lower
5 - Another test. The next candle closes higher in its high but volume is low, not an ideal confirmation but the closure on its highs is a sign of strength
2 - A long spread candle on ultra high volume that closes in its lows. Next candle touches new lows but closes higher so the volume on the previous candle wasn't selling: another signal of accumulation
3 - Ultra high volume after earnings and the candle closes in its middle: this could be a signal of a change in the supply/demand dynamic of the market. Since the candle closes in its middle, the market needs to find out how much sellers are still present
4 - This is a low volume test of supply in the body of the "earnings candle". The next candle closes higher although volume is lower
5 - Another test. The next candle closes higher in its high but volume is low, not an ideal confirmation but the closure on its highs is a sign of strength