Hello BF nice posts. Some of my response will be in this thread and some in the
vsa thread. I hope this can breath new life into a worthwhile thread.
I have used the term WRB support/resistance zone, as PP and Mark have. To be sure, there are many times when you will find the body of a significant WRB acting as support or resistance. However, I think a more appropriate term of the area is "METHOD ENRTY (and exit) FOCUS ZONE".
"Method entry (and exit) focus zone". No matter how one enters: moving average cross, ADX, red bars become green, CCI,
VSA, or candle patterns the body, or zone, of a significant WRB is the ideal place see one's method give a signal. To be sure,
VSA, with its focus on supply and demand is in my opinion superior to use than say a moving average cross system. WRBs represent possible shifts in supply and demand so any other method that is like-minded would be better suited then some, but all would work.
It is very easy to see a WRB appear and then (1) place a line at the body's open and a line at the body's close or (2) write the numbers for the open and close on a post it. It really isn't difficult and many traders would actually be able to simply SEE the zone on the chart. Simply, determining the zone is not difficult, what is more so is determining what a significant WRB is.
Yet, that is not all that hard. First and foremost one needs to ask was the WRB connected to a news release? Clearly, a WRB created on the Jobs release means more than a random non-news generated WRB. WRBs are about price action. Understanding what cause the WRB is a necessary condition to understanding price action.
Volume is another key. A large dark WRB on very high volume with the next bar up means there was some hidden buying going on. This is what
VSA tells us, but once you know just that, one can now focus on what happens within the body moving forward irrespective of
VSA. But again, we can move a out of the
VSA and just think the more the volume the more we need pay attention.
Something you probably already do with respect to candles and such.
Another way to determine what WRBs constitute significant deals with volatility. The chart I posted shows a volatility spike which would have me already predisposed to look to fade it. Had it been a volatility breakout, then I would been looking for a continuation trade...
(This is the part I hate. I can't say much about this aspect. I like WRBs and want to share all I know. I hope much of what there is to know can be found in my posts and those of others on this thread and the
VSA thread. I would rather an interested person NOT spend money to learn this stuff. With that said, I am bound not to disclose some things.)
With that said, Volatility in some ways also equates to candle size. A white WRB larger than the previous 5 white WRBs probably means something. This is just an idea to play around with, but the point would be set a number and stick with it to take out arbitrariness going forward.
BTW, If one looks at the chart you posted of my chart, it is clear that you would of gotten in on the second trade prior to my entry signal-the first test. So for those who are concerned with getting in first, WRB zones are not the panacea.