[VSA] Volume Spread Analysis Part II

[zdo]

Hi all,
Hope this question does not turn out to be ‘too general’ and it is intended for all – Wycoffers, VSAers, and PVers in general.
Threaded through this material are concepts associated with ‘reversion’.
Are the crucial Volume patterns used at SR’s near ‘central tendency’ (POC, etc.) different from the Volume patterns found at extreme SR’s (near tails, spikes, etc.)?

Thanks,

zdo

[Eiger]

	Quote:	zeon
	I like the analyses and the time you put in them is well worth it imo. Thanks for your contributions. One remark though, don't you mean a buying climax at J?

You are right, it is a Buying Climax. When I see these I get so excited that I am just thinking about selling, I guess.

Speaking of Selling Climaxes, there was a very nice one just at noontime today. You can see the volume come in beautifully on that. Study the 10, 5, & 3-min charts of this climax. It tells you a lot about how to read them.

BTW, I feel that the work I put into the charts is necessary. It is not really work, though, because i love doing it. When i review the day and annotate the charts, I am also reviewing my trades, putting more emphasis on the trades that went well. Just like my charts, I log every trade. I find that doing this every night, I learn new things about the market and myself as a trader. On the weekends, I usually review the charts of the week, and sometimes for the last few weeks. It really helps. I think if you really want to learn VSA/Wyckoff, this is a good way to do it along with studying the available material by TG, Williams, and SMI/Wyckoff.

Eiger

[DbPhoenix]

	Quote:	zdo
	Hi all, Hope this question does not turn out to be ‘too general’ and it is intended for all – Wycoffers, VSAers, and PVers in general. Threaded through this material are concepts associated with ‘reversion’. Are the crucial Volume patterns used at SR’s near ‘central tendency’ (POC, etc.) different from the Volume patterns found at extreme SR’s (near tails, spikes, etc.)? Thanks, zdo

Patterns aren't so much the issue as what it is that traders are trying to do at each of these levels. The "pattern" at extremes tends to be a lot of trading activity (volume) spread out over a wide range of price in a very narrow window of time. This creates a lack of support at any given price level during that move. Thus those who for example buy on such an upmove will be the first to bail when things start to go wrong (the weak hands). This is what is meant by "sell strength", when what is meant is more along the lines of "sell apparent strength".

If one has a lot of shares to buy or sell, however, he is more likely to find the opportunity to do so at a price that is beneficial to him if he trades where everybody else is trading, i.e., at the point or level or zone where the greatest number of trades are taking place.

If one can get past the jargon and catch phrases and buzz words, this is what is at the core of any approach that trades via price action, whether the volume is expressed, as for example in stocks, or implied, as for example in forex.

[Sledge]

Question:
Ok the background gives us a large up move indicating weakness. Then Professional $ has stopped supporting the market and it dives. The question is, when you see (for simplicity sake) 2 Wide Spread down bars on ultra high volume. Followed by two or 3 smaller spread up bars, then the market plows downward again, and again they are followed by 2 or 3 smaller low spread up bars.

Are these "mini pullbacks" a result of:
A. Profit taking and traders closing out of their positions?
B. Stop Losses Triggered?
C. Both?

Both "A" and "B" would introduce supply into the market correct?
Sledge

[zeon]

	Quote:	Eiger
	You are right, it is a Buying Climax. When I see these I get so excited that I am just thinking about selling, I guess. Speaking of Selling Climaxes, there was a very nice one just at noontime today. You can see the volume come in beautifully on that. Study the 10, 5, & 3-min charts of this climax. It tells you a lot about how to read them. Eiger

If that was the selling climax, then it looks like we just had a re-test on lower volume. But the nasdaq made lower low while the ES just stopped at about exactly the same level. This is my problem, realizing this is a re-test in real time... I can only do so after price starts to move up, so I'm always chasing price. I noticed price trying to go lower... a downbar. The next upbar closed off the highs, so no buying yet. However the next bar volume comes in big time and there she goes!

Other than (a) taking a gamble that price won't break through or (b) waiting for price to rise and chasing price with a worse entry, how can you pin-point the exact entry?

As I'm typing this, the ES just went up 5 points in one bar! So you need to have very triggerhappy fingers, or you needed to be prepared to take the risk...

[DbPhoenix]

	Quote:	zeon
	As I'm typing this, the ES just went up 5 points in one bar! So you need to have very triggerhappy fingers, or you needed to be prepared to take the risk...

No, it means that you have to be selective about the field on which you choose to play.

I knew going in that today was going to be difficult since there were three distinct S/R zones and that there was a possibility that price would bounce back and forth among them like a pinball. And that's just what has happened. So I had a choice of trying to play all that or stand aside until the market decides just where "value" lies at this time. You have the same choice.

[zeon]

	Quote:	DbPhoenix
	No, it means that you have to be selective about the field on which you choose to play. I knew going in that today was going to be difficult since there were three distinct S/R zones and that there was a possibility that price would bounce back and forth among them like a pinball. And that's just what has happened. So I had a choice of trying to play all that or stand aside until the market decides just where "value" lies at this time. You have the same choice.

I think I did the right thing by closing out my short on the ES earlier. However, I was contemplating taking a long there on the re-test but I was too late and the right signal didn't occur. I wanted to see a hammer-like formation form but price jumped up and by the time I felt like pressing the buy button price had already gone up and I didn't feel like chasing it.

But suppose I did take the long entry... how could I determine my target? Surely the next R would be wishful thinking? You never know ofcourse, but if you say S and R are your targets, do you mean only when you are trading with the longer term trend, are regardless of that? Because in going against the trend I've experienced on several occasions that price does follow the path towards the next S/R level but usually fails to reach it and then reverses before breaking down in the other direction.

[habi]

	Quote:	Eiger
	I think if you really want to learn VSA/Wyckoff, this is a good way to do it along with studying the available material by TG, Williams, and SMI/Wyckoff. Eiger

I just studied Tom Williams/TG and of course both VSA Threads. Since Williams and TG are based on Wykoff's theories, what are the main differences between Williams, Wykoff and SMI?

What for resources do you recommend for Wykoff and SMI?

[DbPhoenix]

	Quote:	zeon
	I think I did the right thing by closing out my short on the ES earlier. However, I was contemplating taking a long there on the re-test but I was too late and the right signal didn't occur. I wanted to see a hammer-like formation form but price jumped up and by the time I felt like pressing the buy button price had already gone up and I didn't feel like chasing it. But suppose I did take the long entry... how could I determine my target? Surely the next R would be wishful thinking? You never know ofcourse, but if you say S and R are your targets, do you mean only when you are trading with the longer term trend, are regardless of that? Because in going against the trend I've experienced on several occasions that price does follow the path towards the next S/R level but usually fails to reach it and then reverses before breaking down in the other direction.

Your questions are becoming more general, so my answers will become more general as well, which isn't going to do you any good. Plus I've lost track of all your shorts and longs, so I have even less idea what to say.

If you want specific help, you're going to have to ask specific questions and post the relevant charts. Which is where a blog comes in.

[Eiger]

	Quote:	habi
	I just studied Tom Williams/TG and of course both VSA Threads. Since Williams and TG are based on Wykoff's theories, what are the main differences between Williams, Wykoff and SMI? What for resources do you recommend for Wykoff and SMI?

I suppose there may be differences, but I see them generally as the same. Tom Williams's materials make it come more "alive", though.

Units 2 & 3 from the Wyckoff course are the most important. Unit 2 is the original course Wyckoff wrote in the 1930s, though it has been somewhat modified over the years. Unit 3 has the refinements to Wyckoff that were developed from the 1940s on. Both are important. Start with Unit 2.