[VSA] Volume Spread Analysis Part II

[DbPhoenix]

	Quote:	Bearbull
	This is a crucial concept DB, would it possible for you to dig up a pattern on your own chart to illustrate ' realise you trade NASDAQ but that should not be a problem to elucidate the concept.

Perhaps the easiest way to illustrate it is with constant volume bars. This is a copy of a chart I posted yesterday to the RT thread as an example of prep. Each of these bars represents 100,000 contracts. Note that in area between 1272 and 1280, you've got 800,000 contracts. However, in the area between 1280 and 1310, the range is three times greater but the volume is half as much, so at any given price point, the number of contracts traded is less. This helps to account in part for the ease with which price retraced all the way back to 1286.

Another example may be found at the end of the day. Note that there are four bars between 1308 and 1315, but only one between 1315 and 1320. This creates an "air pocket" in which one can expect to find little support.

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[zdo]

That does illustrate some of the differences my original and general question was about. Thanks Db. A regular chart with a volume study would also be appreciated as that is what most of us are studying RT. Does the same period on a regular time bar chart show the same process?

Yesterday, jjthetrader replied to my question about volume patterns in value and volume patterns away from value area with “I don't find them any different at extreme levels. If they're going to happen they're going to look the same where ever you are. It's just way easier to take the trade when you're at S&R.” I too have observed that they can and do pop up anywhere. But, if nothing else, the ‘background’ is different for SR’s in ‘value area’ and SR’s outside of ‘value area’ in tails. Let’s narrow the question some to triggered ‘no demand’ and ‘no supply’. Is there consensus that no differentiations should be made about whether price is in value area or out of value area? And only that it’s preferable for these ‘patterns’ (using the word for brevity only db ) to occur at SR?

Thanks,

zdo

[habi]

	Quote:	Eiger
	First, does this remind you of today in the ES? There is a Selling Climax, rally, then not one, but two tests. The second test is a Spring. A Spring often puts the market "on the springboard," as Wyckoff used to say. And, this market was no exception. A quick and vigorous rally off the Spring led to a Jump Across the Creek and an uptrend. Note the absorption that occured at each resistance area. This is a classic chart. Eiger

Hi Eiger (north face? )

Interesting explanation as allways. I have a question about the spring. Why is the first test not a spring, but the second one is? I see in both cases a higher volume up bar closing near the high after the test, but the following price action is different. How do you define a spring?

[Eiger]

Morning Session on the ES:

Here is what I saw this AM (3/12/08) on the 5-min ES H8 chart:

1 - Globex high

A - Market falls to the early morning demand line (support) where buying comes in (note mid-range closes and very heavy volume)

B - Market falls into an Over Sold position. B shows a narrowing spread and mid-range close on heavy volume. This is bag holding. They were buying at A and again at B. The bar after B is a Bottom Reversal, confirmation that the buying was successful and the trigger to an up move.

C - Test on volume less than the previous two bars. Next bar is up with a strong close.

D - Market runs up above the Globex high, but immediately selling enters the market. Very heavy volume on up bars. Note the close off the highs on the bar before D - an indication that supply is beginning to swamp demand. D is a mid-range close on continued heavy volume - supply overcoming demand. Confirmation comes on the bar after D, a down bar.

E - an attempt to rally, but on No Demand

There is some support around the 9:30 high, as seen by the shortening of thrust and mid-range closes. It may try to rally from here, but we'll have to see.

All of this is based on my studies of Wyckoff and Tom Williams's good work, nothing more.

Eiger

[Eiger]

	Quote:	habi
	Hi Eiger (north face? ) Interesting explanation as allways. I have a question about the spring. Why is the first test not a spring, but the second one is? I see in both cases a higher volume up bar closing near the high after the test, but the following price action is different. How do you define a spring?

Don't you mean the "Mordwand"?

The first test is known as a Secondary Test - this is what Wyckoff called it, most just refer to it as a test. Note that the low of this test comes into the area where there was ultra high volume on the SC. It is a test of that volume.

In this chart the test still had some volume on it. I assume that this is why it was tested again with the Spring.

A Spring is also a test. To be a Spring, however, the low of the Spring bar must penetrate the low it is testing. This is one of the reasons why it can be such a good trade. If there is strength in the background, and there is a test of a high volume area where price dips below support and does not draw out supply, then this is a strong signal that there is no supply left. The market will thhen often rally vigorously.

Eiger

[Sledge]

Ok, I have an elementary question that I have been scratching my head about lately in real-time trading. It is about a "No Demand" bar or more certain a bar that looks like an upthrust in a downward move. I am borrowing the chart from the "VSA - No Demand/No Supply & Squats" Thread to illustrate below.

My question is on the "No Demand Bar" is WHY IS THIS NO DEMAND- we clearly see the market rise in the next few bars- and not only rise- but rise ABOVE where the supposed "no demand" bar ends.

Can any veteran VSA'ers out there give me a technical breakdown of THIS particular bar? I see it quite often and it is termed "no demand" but the market always rises above it.
Thanks!
Sledge

VSA.png

[Eiger]

	Quote:	Sledge
	Ok, I have an elementary question that I have been scratching my head about lately in real-time trading. It is about a "No Demand" bar or more certain a bar that looks like an upthrust in a downward move. I am borrowing the chart from the "VSA - No Demand/No Supply & Squats" Thread to illustrate below. My question is on the "No Demand Bar" is WHY IS THIS NO DEMAND- we clearly see the market rise in the next few bars- and not only rise- but rise ABOVE where the supposed "no demand" bar ends. Can any veteran VSA'ers out there give me a technical breakdown of THIS particular bar? I see it quite often and it is termed "no demand" but the market always rises above it. Thanks! Sledge Attachment 5485

It is No Demand, but you have no background for the No Demand to be meaningful. To be meaningful, you would need to see supply hit the market. Once you see supply, then you look for No Demand. You have an up trend on this chart. With the overall background bullish, this particular bar has no real meaning. If you are in need of a resource on this, the TG Boot Camp DVD set goes into this in great detail, and is quite worthwhile to study if you are interested in learning more on how to use these signals and when they are meaningful.

Hope this is helpful,

Eiger

[dandxg]

	Quote:	Eiger
	Ticks are the net number of shares on the NYSE trading on the up-tick or down-tick (i.e., trading at a higher price than the immediate last price or at a lower price than the immediate last price). They can be helpful. The S&Ps have most of the biggestest, most important stocks of the NYSE - sort of a sample of the NYSE, so Ticks are fine to use with the S&Ps. It is the only other indicator I use when trading the ES. You can use the Ticks kind of like an oscillator. Usually, when the market hits an extreme of buying or selling, the ticks will show an extreme. Typically, these are in the +1,000 to -1,000 range, but it all depends on the day. At the Selling Climax at noon today, Ticks hit -1229. That was pretty extreme, given that they didn't crack below -1,000 throughout the morning downtrend until the climax. They can be useful for timing an entry, too -- sometimes showing an extreme reading (like that buying climax yesterday during the noon hour) and sometimes giving a divergence. For an example of divergence, look at the last swing high on the attached chart before the Selling Climax. It is not labled, but if you look closely, you will see that price rose higher at the top of the rally; Ticks did not, and that action resulted inan upthrust. Plot them on the same chart as price and volume and you will begin to see the possibilities. Here is a 3-minute chart of the ES with Ticks at the Selling Climax and Spring today. Note how ticks showed an extreme on the Selling Climax (the market was one-sided). On the Spring (L), ticks were considerably above the climax lows (K), indicating a lack of selling pressure. The same indication was seen in the volume. Here's a pretty good article on trading the S&Ps with Ticks: [media]http://www.lbrgroup.com/images/terry_april_2002_AT.pdf[/media] Eiger

A question if I could please. For those that use $tick to confirm PV signals do you use the 2 on the same time frame. I ask because a friend of mine uses A/D on a 1 minute but trades the ES off of a 3 min? I guess that would be some attempt to front run? Anyway that's why I ask. Thanks much Eiger for sharing that. It would definitely give me more confidence to truly buy low and sell high with PV. Currently I would wait for a breakout of the range and buy/sell a pullback on lesser volume.

[DbPhoenix]

	Quote:	dandxg
	A question if I could please. For those that use $tick to confirm PV signals do you use the 2 on the same time frame.

I use the same interval for both, 1m for each (the NQ, that is, but the idea and process are the same). Apparently I use the TICK(Q) differently than most. When I first played with it years ago, before Wyckoff, I couldn't see what everybody was so excited about. Now it makes more sense, or at least the way I use it makes more sense to me.

Anyway, I posted charts of what I saw in yesterday's action here, yesterday evening: http://www.traderslaboratory.com/for...0-post117.html

[Seb Manby]

Hi All;

I am checking out some code I put into MS, I will use TradeGuider for the rest of my trades, I think that it is easy to post text onto charts that have come and gone, and I just thought you might find this video interesting, I thought you might like to see VSA in action instead of yap,yap,yap. This one has no sound,

Dax trade on 3m chart with eSignal and MS

Regards Seb