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Can anyone shine some light onto why I might have misread (VSA wise) this trade I took yesterday?
We had a nice run up (this in on the ES), got an ultra High Volume Up bar followed by an upthrust on huge volume as well.
We broke the low of the upthrust so I started watching for a short entry. Once I saw that no demand I took it.
The next bar moved up against me on increasing volume to close near the top so I put in a break even order and got out on the bar following that.
In hindsight you could say I was clearly wrong but in real-time it looked so right. Any ideas about what I may have missed? Was it the no Supply bar 5 bars back from the no demad that signaled higher prices?
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Obviously this is after the fact. However what I will say can be seen in more than one post in this thread-at the very least it is consistent.
1. Ultra High volume on the up bar. Markets do not like Ultra High volume up bars because they can hide selling within them.
2. The next bar is down, confirming that there was some supply entering on the previous bar. This bar also happens to be an Upthrust. Another sign of weakness.
3. The very next bar is the key. It is a narrow range bar on volume less than the previous two bars. It closes lower than the previous bar and the bar that follows it closes up and does not make a lower low. Simply, it is No Supply and is not confirmed until the bar after it closes.
Take a look at what you have as No Demand. Notice that the bar after it is up and makes a higher high. This negates the bar as being No Demand. While the base definition of No Demand would be a narrow range up bar with volume less than the previous two bars (a 1 bar signal), one really needs to wait for confirmation by the following bar. This is how TG works.
Back to the No Supply. This is a repeating pattern that is a good sign of strength. A No Supply bar immediately after the Upthrust that followed an influx of supply.
Since I filter this through my own perspective, I would add that it appears that the No Supply bar would be with in the range of a WRB (the up bar on Ultra High volume if in fact that is a WRB). More reason to be looking to go long not short.
**edit***
Just wanted to add this. There is a sign of supply coming into the market that only moves prices sideways (a sign of overall strength). This is where the triangle on the chart is. Now if you look at the Up bar in question, it is more likely Absorption volume and therefore a sign of stregnth not weakness in and of itself.