[VSA] Volume Spread Analysis

[dupaski]

	Quote:	PivotProfiler
	Hello VSAers; By now most if not all have seen the Cramer video. But if you go to youtube.com and type Market Manipulation in the search box, a few videos down from the Cramer one is a video by Tom Williams himself.

I have a video of a presentation Williams and Krueger gave for the CBOT back in Sept. of '06 if anyone is interested. It's about 50 Meg so perhaps I can post it somewhere to make it available if there is any interest.

[newsfx]

	Quote:	dupaski
	I have a video of a presentation Williams and Krueger gave for the CBOT back in Sept. of '06 if anyone is interested. It's about 50 Meg so perhaps I can post it somewhere to make it available if there is any interest.

That would be great. I haven`t seen this video. You can upload this to mediafire.com and then post the link.

Thanks

[BlowFish]

	Quote:	PivotProfiler
	---snip--- Almost an hour beforehand, we see an Ultra Wide Spread Bar with Ultra High Volume, that closes down from the previous bar and closes in the middle of its range. This bar represents a transfer of ownership. That is, the Professionals are buying from the retail traders. Why would they be buying prior to a usually volatile news release ? Seems like a risky thing to do. Could they already have an idea of what it will say? ---snip---

Hi PP,

In reply to this a couple of posts ago. I had a bit of trouble seeing this. Agree its ultra wide ultra high however it is only a wee bit up (could make an argument that it is fairly neutral). The price was run down and attracted buyers and run up where it attracted sellers. Without seeing "inside the bar" (lower time frame) I have trouble seeing this as the smart money buying. I wondered if there is anything esle that gave that clue?

Thanks for your excelent contributions btw, first class! Actualy this was the first thing I could not see with clarity

Cheers,
Nick.

[Anonymous]

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.

[mroalan]

again excellent work pivot,i have long been a believer of volume,just goes to show your never to old to learn,only been a member here for only aweek,its like christmas!

[domanaperth]

	Quote:	PivotProfiler
	I always say start with the book first and then get the bootcamp. Of course it they come packaged together that would be the best. What you really need to know is how YOU learn best. If you learn better reading about a concept, then Cleary start with the book. If you learn better in a more lecture type setting then you would want to start with the bootcamp. * Remember, the book needs to be continuously read. One read will not be enough. *

Thanks PivotProfiler. Just wondering if any member[s] purchased the material.

[mroalan]

yes i,d go along with that walt,its simplicity in itself,by the way Tin what software are you using,and one more for you,what is YM?thankyou. mro.

[mroalan]

sorry tin,i,m asking questions as i reread the thread,i was refering to your chart on page two ish.mro.

[Anonymous]

	Quote:	BlowFish
	Hi PP, In reply to this a couple of posts ago. I had a bit of trouble seeing this. Agree its ultra wide ultra high however it is only a wee bit up (could make an argument that it is fairly neutral). The price was run down and attracted buyers and run up where it attracted sellers. Without seeing "inside the bar" (lower time frame) I have trouble seeing this as the smart money buying. I wondered if there is anything esle that gave that clue? Thanks for your excelent contributions btw, first class! Actualy this was the first thing I could not see with clarity Cheers, Nick.

Thanks for the kind words. I believe you are talking about the chart labeled " what did they know and when did they know it". I hope that is correct.

First, you are correct. It is a bit hard to see.

Generally speaking the bar is broken up into thirds by TG. So by that matrix the bar closes in the middle. In reality it is a close that is not in the middle but still only slightly in the upper portion of the range. I do think the close is close enough to the middle to be considered a middle close. And we know that middle closes on wide spread bars are important.

But we really need to look at the bar prior and the bar proceeding to get an understanding of what is going on. Note that this bar closes equal to the previous bar. With all that volume the bar managed to go nowhere. But with all that volume, we know the Smart Money was doing something.

What cannot be seen on this chart is the fact that prices were trending more to the downside than the upside prior to this bar. So, if Smart Money did come in on the bar, the first inclination is to see it as Demand. Even if we consider the close as being in the upper portion we have to assume that there was BUYING going on in the bar. If there had been selling the bar should at least be slightly to the down side of the bar.

But wait. No position is going to be taken at this point anyway. Now on the very next bar volume dries up, the range narrows and the close is in the upper portion of the bar. This is a test. If the Smart Money is testing for supply, they MUST have been buying on the previous bar. Simply, we would not get a test on low volume, if they had been selling.

Note I did not mention the fact that this is a white candle (close>open), because VSA does not look at the open. But as I do, I also can see that price closed up from the open so I have another clue as to buying on the bar rather than selling. There are some candle traders that would call this bar a Doji because of the width of the body in relation to the overall candle length. Doji are indecision bar. If we then look to Long Shadow analysis, we know that a shift in supply/demand is likely. So something is happening on the bar. Based on what has come before and what comes after the entire picture comes into view.

From a repeatable pattern point of view, tests very often come after bars with Ultra High Volume where demand comes in. So you don't have to get too caught up in the middle/slight upper close issue of the bar. More over, why would Smart Money test for supply if they had just dumped some? They would not. Hence they are looking to take prices up and must of been buying prior to the test.

Had the test failed.................. see next post.

[Anonymous]

This post builds on post # 114.

After the up move in price what happens next?

There is on thing we want to keep in mind; we had a couple of Gaps on the way up. Gaps are usually filled. They can at times, however, act as support and resistance areas......

Let's look at the what happens when a test fails.

The first thing you will notice is a WRB. Not important to VSA but oh so telling to the rest of us. The best places to see tests, upthrusts, and no supply/no demand bars are within the body of a WRB or shadow of a Long Shadow candle.

We have our WRB in place. This creates a natural support/resistance zone. Next we see a narrow bar that closes near its high, closes equal to the previous bar, and has Ultra High volume. THIS IS A HIGH VOLUME TEST. Smart money is looking for sellers and is finding some. While it is true that sometimes the market goes up on high test, it usually does not go up far and then comes back down to re-test the area.

As always the next 1 or 2 bars need to be considered. To actually confirm the test we need to see one of the next 2 bars close Higher than the close of the test. Otherwise, we have a failed test. Notice what happens here. The next bar is down and then the bar after that is an up bar but closes equal to the close of the test bar. Now, look at the next bar. We have an up bar that closes in the middle to slightly up on relatively high volume. It is not as high as the test, but it is still high.

Up close (from previous bar), on high volume closing near the middle: This is supply entering the market. At this point, we have a FAILED test on high volume and more supply showing up. The very next bar closes on the high with volume less than the previous two bars and closes higher than the previous bar. This is no buying pressure. As it would happen, the high of this bar is equal to the close of the WRB. TG WONT TELL YOU THIS. Then we get the next bar down. From a VSA point of view, now is the time to go short.

* the test of supply has failed.
* New supply entered.
* No buying pressure.

couple that with the fact that there are gaps below and all this is happening at the low of the S/R zone of a WRB.

Now let's take a look at a test that does not fail. I would first point out that from a time of day perspective, this is not an ideal time to be entering a trade.

It all starts with a WRB.

We have an Ultra Wide Spread bar on Ultra High Volume that closes on the low. But the next bar is up. If this bar is up then there must of been some buying in the previous Ultra Wide Spread bar. WRB analysis tells us that changes and shifts in supply/demand occur in WRBs. More reasons to think something is indeed going on.

3 candles later, we see a narrow range candle that closes on its high, makes a lower low and has volume less than the previous two bars. THIS IS A TEST. Technically a possible test, as we do not have a confirmation bar yet.

Confirmation comes 2 bars later when we see an up bar that closes higher than the close of the test bar. First possible entry point, with no regard to time of day. If you missed that point there is another. We get a bar that closes on its low, has a narrow range, has volume less than the previous two bars, with the next bar up. THIS IS NO SELLING PRESSURE/NO SUPPLY.

What is nice about this bar is the volume. While the test volume was lower than the previous two bars, it was not as low as the volume on this bar. More evidence of the lack of sellers underneath. Also note that we are within the range of the WRB as on this bar. So we have a second chance entry which may in fact be the most ideal entry of all for some (leaving time of day out of the equation).

Back to the test candle. Some may note a hammer line that appears to traverse into a bullish white hammer pattern. It does not. But if you had mistaken it as such, here too, time of day should have kept you out.