[VSA] Volume Spread Analysis

[BlowFish]

Here's a chart showing where I would consider entries. Apologies for the clunky annotation MSpaint is not that great for the job!

The yellow lines are S/R zones they are more or less where I see supply and demand entering though most are clearly confirmed within a couple of bars as the level is 'proved' by the level holding against attack. A quick aside - as I have mentioned before I have a bit of an issue with using WRB's (and wicks alone for that matter). I certainly do not want to take away from PP's excellent work here so I'll put that in a paragraph at the end so those who wish to can ignore it.

The first black bar on the left is the first correction in the move the high and low represent the start and end of that correction. The first visit back there I would for sure have taken a long (probably ). You would have had to jumped in pretty much on faith but getting in on a test is a very rewarding entry when it comes through.

The first cyan dot is a pretty perfect entry I'd probably have had a crack if my longer term bias was short. Second pair of dots would be a good entry also though it would have been nicer a bit later so it was at the trend line or a bit higher with an upward test type bar.

Toward the end things are starting to look iffy for shorts (again depending on longer term context). I would be a little wary as the trend line is broken. I have no issue with re-drawing a trend line though. Who needs momentum indicators!! you can see we are still moving down but the momentum has slowed.

OK a quick bit on WRB's - the open and close that define a WRB are single 'ticks in time' they don't really represent any consensus or behaviour. They are simply a function of how you sample time to draw the candles. They are determined at an arbitrary single point in time. Now to take a point in time (the open of a bar) and another point in time (the close) and say they are far apart does have value to me however the specific price at those split seconds in time don't. Further more there is no shift in the over all dynamic if a bar opens it low and closes on it high even though supply must have been present it has not caused the price rise to abate. You may well get 1 2 3 or more of these candles. I believe there is are candlestick patterns (not near my books now) maybe called 3 black crows & 3 white soldiers. They are in essence 3 WRB's in a row.

Now using highs and lows is altogether different they represent where supply has overcome demand and caused the price direction to change. While this occurrs at a point in time it is significant over a range of time. More over every time price bumps against that level and is repelled it adds confidence to that level. From the attached chart you can see that happens often.

Finally WRB's are often caused by stops cascading, people jumping on to breakouts or the 'smart money' moving price through a level. If you go behind the WRB you will usually See the true S/R in the case of the chart here the congestion bottom left and the congestion up top after price has been run up. This I guess Wycoff's basic accumulation mark up distribution 'model'.

Finally don't listen to me listen to PP! Seriously. This thread is gold dust and I really don't want to detract from that. Actually I feel like an interloper coming in once every few pages with my paltry offerings.

Cheers,
Nick.

[Anonymous]

	Quote:	flatwallet
	How would you read the following chart?

Hi Flatwallet. We are all interested to know how you see it. The more perspectives given, the more we all can learn. Thanks for the chart and keep 'em coming.

The key bar is obviously the Ultra Wide Spread bar with Ultra High Volume. I notice that the volume is painted powder blue. So I am sure this catches you attention.

I can not look a this bar without using the Highly related concepts in WRB & Long Shadow Analysis. Thus, forgive me for some non-VSA ideas that follow.

First note that this bar closes down from the previous bar, has Ultra High Volume and closes in the middle (or slightly above). As soon as this candle is created, one should think Transfer of Ownership bar. That is, the strong hands are buying (demand) from the weak hands. The Smart Money is either buying back their shorts, or simply buying in anticipation of a future rise in price.

Next we get a No Demand bar. This tells us that while the Professional Money was buying on the Wide Spread Candle, they are not yet interested in higher prices. It is also possible, that all that High volume meant that there is still supply (sellers) in the market. Price does indeed continue south. Now, even though there was buying (demand) on the Ultra Wide Spread candle, there is such a thing as momentum. It does appear that the trend was moving down at this point, so the momentum created by the move can take prices lower even in the midst of demand. Nevertheless, I am looking to go long.

To go short, I would want to see a No Supply sign in the shadow of this Long Shadow and then either the No Demand or an Upthrust.

The market heads south, the we get a No Supply sign. For me, still not a point to get long. Note that this candle is up against the support/resistance zone created by the Long Shadow, but not within it. It is, however, within the body of a large dark WRB. I WOULD LIKE TO SEE A LOW VOLUME SIGNAL WITHIN THE RANGE OF THE SHADOW. The market starts moving up and we get a Test bar. This is a low volume test in the ideal area for me. Again, we have a low volume sign within the range of a previously high volume candle.

Note that the volume on the test candle is not less than the previous two candles. It is, however, lower than the previous bar and the second lowest since the Wide Spread candle (Long Shadow).

Also note that this Test is within the body of a large dark WRB.

[flatwallet]

Pivot,

I am fairly new to VSA and while I appreciate it, I know how to read it properly. What I've noticed in my personal chart reading is that I tend to be biased when I see the full picture. That is why I posted a partial chart to see what you would be looking for. This was not to quiz someone's knowledge, however, I wanted to to get an unbiased read like you normally have to do in real time. This is what I learned from your analysis:

"Note that this candle is up against the support/resistance zone created by the Long Shadow, but not within it. It is, however, within the body of a large dark WRB. I WOULD LIKE TO SEE A LOW VOLUME SIGNAL WITHIN THE RANGE OF THE SHADOW."

Wow. That is the kind of stuff you don't find in the book as Tom Williams tells you a lot but it always in the context of "and TradeGuider will help you find this witha bar" blah blah. Take a look at the posted chart. Prices do not move above the Shadow. FYI. The next day was chop that closed in the middle of the Opening WRB. Thank you for teaching us yet another thing to look out for.

11:30 - 12:00 There are two no demand bars one red and one green. But if I can't evaluate the next few bars, I would not be sure if I should go long or short. I assume short only because the general trend was down.

[Anonymous]

Thanks Flatwallet. Would it be possible for you to post a 15 min chart of the same timeperiod?

P.S. are you sure this is the same chart? The test bar is not on the "extended" version. AND THAT CHANGES EVERYTHING. Without that candle, the upthrust (last candle on the origianl chart may be the key candle). Maybe I am looking at it wrong, but it looks like the entire shadow of the test bar is gone. Which makes a for a less worthwhile test. Especially,as mentioned in my first post, since the volume is not less than the previous two bars.

At any rate, I have no problem with my first post and the negative results. So long as that one candle is correct. But again, please post a 15 min of this period if possible.

[flatwallet]

Pivot,

It's the same ticker. You may need to click on the image to see the shadows properly.

Also, as per your request:



Thanks

[notouch]

All the charts are very interesting but a lot of the analysis in this thread is hindsight analysis. So I thought it would be interesting to post a daily chart of YM and do a bit of VSA on it.



On 04/25 we have the highest volume of the month together with a wide ranging candle which closes near its high. This suggests weakness could follow. The next day, however, is an up day which doesn't immediately suggest weakness BUT it could be interpreted as a "no demand" day given its narrow range. The bearish scenario is confirmed by today closing on its lows.

Any opinions on this analysis?

[notouch]

No one has the balls for some real time VSA analysis? Hindsight analysis is easy. Foresight analysis separates the men from the boys.

Today was interesting from a VSA perspective. Early weakness as expected so you could have picked up 50 points on YM from that. Ultimately though I recall something one of the speakers in the VSA seminar said: you need to filter your trades. In a strongly trending market like the US stock indices right now you need a long-only filter. Intraday VSA would have got you into 2 good trades on YM today.

[Vercingetorix]

What do you mean by foresight analysis? Calling out trades using VSA in real time?

I posted some charts of some swing positions I took using VSA in this thread: http://www.traderslaboratory.com/for...-new-post.html

Earlier in this thread I was bullish on the stock indexes using VSA a month ago: http://www.traderslaboratory.com/for...42-post58.html

[flatwallet]

Fight fight fight....

NoTouch...I for one am just a VSA newbie...as for the other, I don't think any of them actually visit the website a whole lot during the day...and even foresight analysis can teach us a lot if we see this during the day...just my 3 cents...But I think we will all welcome charts and vsa lessons from you...so please post or bring to our attention some great vsa concepts...much like Vercingetorix call on BIDU prior to earnings

[notouch]

VSA applies just as much to longer term time frames as shorter term ones so posting daily or hourly charts together with an analysis of what might happen next day is more interesting than an analysis of what's already happened. I appreciate some posters have already done that and didn't mean to offend anyone. I was just a bit cheesed off that no one responded to my "what happens next" YM analysis. Too late now...