Post #121
One thing that I am very struck with is the overlap one finds in " things that are true" across various methods.
Take for example the chart below.
Notice that we have a valid High Close Doji pattern.
This pattern appears within the body of the WRB and the following Ultra Wide Spread bar with Ultra High volume. Take a look at the test bar.
VSA tells us that a test bar is when Professional Money "mark" prices down to see if there are is any supply (sellers).
VSA, however, does not look at the open of the bar. But look at what we see if we do. First, we see that this bar is a doji. In candlestick terms this bar represents indecision. More over, the close on the top means price was rejected as it moved down. This is not unlike what
VSA tells us.
When we look at the entire bar, what must be the way the bar played out? The bar opened up, went down and the price came up to close right where it opened. Clearly, we can see that Professional Money "marked-down" the price only to take it back up again. In this case, we have a "perfect" example of the true intentions of the Smart Money. If the open had been lower on the bar, we would of course still have a test, but the picture would be different. For example, if the open was at the low of the bar, we would still have a test, but we would not get a sense of the "mark-down".
Note that the other labeled test candle opens in the middle and closes on its high. We do see the action (mark down-price rejection) here as well.
To be clear, tests come in various forms and the key is the volume and the close. But some tests are more reliable than others. Volume plays a role here but so does the open. Tests that are also dojis tend to be the optimal type of tests. To those that use candles, this makes sense. Hammers with long shadows also make ideal test bars.
Two methods reaching like conclusions.
It should be pointed out that a test bar needs confirmation. Ideally that confirmation comes on the next bar with a close higher than the close of the close of the test bar. If that confirmation bar closes higher than the high of the test bar and it (the test bar) is a doji, well, now we have something..............
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