Post #114
BEFORE & AFTER:
I have attached two charts. The first is the before and the second is the after.
Let's look at the before.
For me the key concept comes thru at least a basic understanding of WRBs. Of course,
VSA doesn't look at the open, but I think much is missed if you don't. More over, I think that if
VSA did, they would come to the same conclusion. And in fact, they DO come to the same conclusion partially when dealing with wide spread bars (more on this later).
The first bar with the double arrow is a wide spread bar that closes in the middle on ultra high volume. Supply enters the market on this bar. Not a place to go short. The reason: the reason is explained in the next highlighted bars.
The next bar we have is a Long Shadow and in
VSA terms, it is Ultra Wide Spread bar on high volume, that closes lower than the previous bar, and closes in the upper portion of the range. DEMAND entered the market on this bar. Now, here is where I depart from
VSA. We now have a Long Shadow that creates a support/resistance zone. We also see that this Long Shadow tells us that demand overcame supply on the lower portion of the bar. Not to mention, this bar is a Doji (close=open).
VSA does not care that it is a doji, yet the conclusion that something is changing in the supply/demand dynamic is the same-Buyers came in on this bar.
Still not the bar to get into the market on. The next key bar is a WRB. WRBs also tell us of shifts or changes in supply and demand. Then we get a No Demand bar. Again not a bar to enter on. What we need to see is something happen within the RANGE of the WRB AND OR THE RANGE OF THE SHADOW OF THE LONG SHADOW BAR.
Ideally, the market will move back down and give us a No Supply or Test within these ranges. Then we should be looking to go long. And that concept is what Todd does not say much about. Clearly, he would not talk about within the context of the WRB because he does not look at the open, but he can talk about the overall range of the Ultra Wide Spread bar. In other words, even though he would not know it is a Long Shadow, he would recognize the bar as Ultra Wide Spread and thus should be used as a matrix to measure what comes.
The next chart is the AFTER.
We do indeed get the No Supply sign in the range of the WRB and the Long Shadow candle. Once we have the confirmation bar up, the next bar, we get long at the close of that bar/open of the next bar.
Note that there are two gaps and gaps are usually filled so we need to keep that in mind.
114_before.jpg
114_after.jpg