Read it carefully. You have a series of actions that has put the stock into a bullish position. All that is the context.
If that previous action has absorbed supply ?
The Climax , The Shakeout , etc.... He then makes the point then that this rally "on comparatively light volume implies a scarcity of offerings" Confirming the previous indications of a change from weakness to strength by breaking the downward stride.
breaking the downward stride
Now look at this rally. IS it braking resistance ? Is it a breakout ?
No ! Would you expect it to gather a quick following. What about all the lagging indications ? How many bars ? Not enough to create a pattern , or change an indicator. And way below overhead resistance.
Would you not want to see this rally on low volume ?
If there is no likelihood of buyers following this small wave ?
What would volume signify ?
SUPPLY... You have no defined uptrend. Many would say it is in a down trend.
many would expect selling to occur and resume.
But we see small volume on that bar marked "5" after the two previous bars that "5" defines as Absorption and then what of the next down bar closing on the high ? "6" it is unmarked ... Would you say lack of supply here ?
He is reading the action as like a film. he makes definitions that the subsequent action confirms . If this is buying and absorbing of SUPPLY. Then that first rally will be low volume, There is no following by buyers and you are looking for signs the selling is finished. So low volume.
Now at the point where you expect lagging indications to be followed ?
When it does breakthrough the overhead resistance ?
Then you see volume. huge relative volume.
But the price action just keeps powering through.
Motorway