[VSA] Volume Spread Analysis

[Anonymous]

	Quote:	Tasuki
	The only question I have is whether or not a true test should close below the close of the previous bar. There are examples of tests from this thread which go both ways--some closing above the close fo the previous bar, some below.

The best case senario is for a test to close lower than the previous close. However, a test can close equal to and even higher than the previous bar.

That does not look like a test to me as it does not make a lower low. Just looking at the chart, it looks like the candle opened up on the low, and equal to the previous close, and then traded up for the period. While VSA does not look at the open, the open here shows that no time was spent to the downside, and thus when where they testing?

Tests go lower before closing on or near the highs.

I would be looking to see a low volume test in the range of that Long Shadow.

[Anonymous]

	Quote:	jjthetrader
	ranj, I found the test that contained that bar on the 5 min and it had low volume.

Beautiful.

A test as price trades around R1. All one has to do is focus attention on what happens around certain predetermined levels (like pivots or Market Profile).

I know its after the fact, but look how logical the Test is.

1. Price is moving up towards the pivot
2. Price breaks the pivot
3. Price moves down below pivot again, but the volume is drying up on the downside action. Price closes on the high on a Test bar.

It makes logical sense that once the Resistance is broken that a Test of that area would occur. Now some may say that resistance did not truly act as support as price got below R1, but we can see that the move below was false in the first place. Hope you were able to take advantage of it.

[TinGull]

JJ, I wasn't in that trade. It's an issue that I do look at but just didn't catch it that day. Ah well, there'll always be others.

[jjthetrader]

	Quote:	Tasuki
	Daily chart of the Dow. Today's action (hard right edge) looks like a failed test to me---tested lows, closed near high, but volume higher than last few bars. This would suggest that we haven't seen the bottom yet. The only question I have is whether or not a true test should close below the close of the previous bar. There are examples of tests from this thread which go both ways--some closing above the close fo the previous bar, some below.

What exactly are we testing here? The August Volume? I'd like to see a little bounce then come back to test the down move (on high volume) that made it bounce.

[MC]

Could you VSA pros take a look at ticker IM for me and time permitting post a chart on your thoughts.
October 18th is the main day I'm looking at. The 18th had heavy volume with a narrow spread. Then October 26th looks like more buying at the lows. So I see this as bullish longer term with the 19th having low volume on a down day, but that 18th has me wondering really how that volume could have been buying and had such a small spread. I'm wondering if you see that as distribution or as absorption.

Thanks guys...keep up the great posts.

[ranj]

	Quote:	mcichocki_
	Could you VSA pros take a look at ticker IM for me and time permitting post a chart on your thoughts. October 18th is the main day I'm looking at. The 18th had heavy volume with a narrow spread. Then October 26th looks like more buying at the lows. So I see this as bullish longer term with the 19th having low volume on a down day, but that 18th has me wondering really how that volume could have been buying and had such a small spread. I'm wondering if you see that as distribution or as absorption. Thanks guys...keep up the great posts.

Hey Mcichocki,

I see what you mean the 18th had UHV on a narrow spread. That to me looks like a ton of effort with no results. If that was into new high ground it would "end of a rising market". I can't get a feel for the rest of the chart.

Sometime I will look intraday to see when and where the volume occured on those very high vol days. Also I will look at the sector, and if the sector ETF of index sold off that day and this stock had high volume closing higher, that might imply buying when the news is bad.

But normally a bar like the 18th would make me feel bearish on the stock.

[MC]

	Quote:	ranj
	Hey Mcichocki, I see what you mean the 18th had UHV on a narrow spread. That to me looks like a ton of effort with no results. If that was into new high ground it would "end of a rising market". I can't get a feel for the rest of the chart. Sometime I will look intraday to see when and where the volume occured on those very high vol days. Also I will look at the sector, and if the sector ETF of index sold off that day and this stock had high volume closing higher, that might imply buying when the news is bad. But normally a bar like the 18th would make me feel bearish on the stock.

Thanks, yeah if that was at a new high I'd say 1000% distribution and bet the next day would be red with more sellers . The part that's throwing me off is that volume and spread in the range its in. Very odd and I'm not sure what to make of it. In my limited experience I'm leaning towards absorption since it closed up and the next day wasn't followed with more selling. But I also note the volume is quite similar to that of 8/8 so maybe those buyers unloaded. Also demand wasn't there recently to break resistance.

Another odd thing is I pulled the intraday charts but the 18th volume has nothing like what's shown on the daily chart. I know the insiders are and have been selling so maybe those were insides sales or other pre/after market actions?

Thanks again

[jjthetrader]

I posted the chart to make it easier for others to comment on it.

I see selling on both bars you inquired about. The 29th appears to be a no demand after that high volume up bar. If it where buying then the price would have continued up.

[jjthetrader]

Wonder if PP and others can help out here with VSA reading
In the attached chart the market has risen over 100pts , this is a TG chart with VSA indicators,

Now At "A", we have an upbar closing near middle on high vol, VSA signal indicates hidden selling.
At "B" the indicator lights up a No Demand bar.
and at "C", there is the upthrust

All the elements appear to be in place, a substantial rise, hidden selling, no demand, sideways move indicating distribution and finally an "Upthrust",

Question: Where and when if at all would one consider going short. and what would negate that ?"

[tawe trader]

This is my kind of low-risk set-up, I would go short after the low of 'C' is broken (Upthrust bar), with a stop a couple of pts above it.

Isn't the whole purpose of the Upthrust bar in this situation is to bring in new longs just when the mkt is looking like it's ready for a down move ?