[VSA] Volume Spread Analysis Part II

[Sledge]

Post #133
Originally, I was going to post this pic in the WRB thread and make the following point.

Not all WRBs are created equal. While there may be many factors in what constitutes a significant WRB, the three main are:

* Size in relation to other WRBs
* Amount of volume
* If the WRB is the result of some news related event

NihabaAshi is the true WRB expert and may be able to enlighten us as to some of the more reasons that determine a WRB's significant.

As I know you are looking at VSA, don't let what I just said about WRBs confuse you. There are three factors that constitute significant bars in VSA as well:

* Size in relation to other wide spread bars
* Amount of volume
* If the wide spread bar is the result of some news related event

Now in the chart below we see numerous WRBs or wide to Ultra wide spread bars. However, they are all not equal.

Let's just focus on the very first one on the left hand side of the chart. We see an Ultra Wide Spread bar with Ultra High Volume that closes up from the previous bar. VSA teaches us that markets do not like Ultra Wide Spread or Wide Spread bars on high or Ultra high volume. Because they could hide selling (supply) within them. Although some times they are indeed strength. Which by the way, much time is spent on in the bootcamp. Because many people after hearing weakness (supply) comes in on up bars automatically assume all up bars are weak.

We know this bar had some selling (supply) once we see that the next bar is down. If all that volume was buying (demand) then the next bar could not be down.

What we often see next, if the market is strong, is either a No Supply or Test for supply bar. Here we see a test. This is a low volume test. Note that volume is less than the previous two bars. Note that the test makes a lower low than the previous bar and closes on its high. It hard for me to separate some things, so I must point out that this test bar is in body of the WRB. But from a pure VSA point, note that the test is within the range of the Ultra Wide Spread bar. SIMPLY, A LOW VOLUME SIGNAL WITHIN THE RANGE OF A PRVIOUSLY HIGH VOLUME BAR.

Many concepts in VSA are logical. Here we see some supply enter the market. The next thing we see is a test of supply. The Professional want to take prices up, but are making sure that the supply is out of the market. If there were sellers underneath, then there would be more volume. And if a large amount of supply had entered (more than the demand present) then price would go down on more volume.

The key(s) here are that the 'test' comes immediately after we see supply enter the market showing us market strength. Or, simply put, location and background information. An aggressive trader might enter once the test is "proven" on the next bar that closes higher than the close of the test. Shown here. The reason for the question mark is that not everyone would enter at this point. Some use multiple timeframes, some use price action patterns, and some even use indicators ( ).

To be sure, the market did indeed move up and a quick profit could have been made. In fact, one could still be long as of this pic and in profit using only one timeframe and that repeatable and reliable pattern.

Once you witness Ultra Wide or Wide Spread bars on High or Ultra High Volume, you want to then start looking for bars with low volume. This is where you find no supply, no demand, and some test bars. Sometimes there will be high volume tests or Upthrusts on high volume. An Upthrust is kind of like a high volume test but showing weakness rather than strength. That is, a high volume test will close on or near its high and an Upthrust closes on or near its low. Ideally a high volume test will make a lower low while the Upthrust will make a higher high.

There is a lot more here, but it is enough to say that every No Supply or No Selling Pressure sign in this pic is within the range of a significant Wide or Ultra Wide Spread bar. More precisely, within the body of a significant WRB.

[Sledge]

Post #136
Originally, I was going to post this pic in the WRB thread and make the following point.

Not all WRBs are created equal. While there may be many factors in what constitutes a significant WRB, the three main are:

* Size in relation to other WRBs
* Amount of volume
* If the WRB is the result of some news related event

NihabaAshi is the true WRB expert and may be able to enlighten us as to some of the more reasons that determine a WRB's significant.

As I know you are looking at VSA, don't let what I just said about WRBs confuse you. There are three factors that constitute significant bars in VSA as well:

* Size in relation to other wide spread bars
* Amount of volume
* If the wide spread bar is the result of some news related event

Now in the chart below we see numerous WRBs or wide to Ultra wide spread bars. However, they are all not equal.

Let's just focus on the very first one on the left hand side of the chart. We see an Ultra Wide Spread bar with Ultra High Volume that closes up from the previous bar. VSA teaches us that markets do not like Ultra Wide Spread or Wide Spread bars on high or Ultra high volume. Because they could hide selling (supply) within them. Although some times they are indeed strength. Which by the way, much time is spent on in the bootcamp. Because many people after hearing weakness (supply) comes in on up bars automatically assume all up bars are weak.

We know this bar had some selling (supply) once we see that the next bar is down. If all that volume was buying (demand) then the next bar could not be down.

What we often see next, if the market is strong, is either a No Supply or Test for supply bar. Here we see a test. This is a low volume test. Note that volume is less than the previous two bars. Note that the test makes a lower low than the previous bar and closes on its high. It hard for me to separate some things, so I must point out that this test bar is in body of the WRB. But from a pure VSA point, note that the test is within the range of the Ultra Wide Spread bar. SIMPLY, A LOW VOLUME SIGNAL WITHIN THE RANGE OF A PRVIOUSLY HIGH VOLUME BAR.

Many concepts in VSA are logical. Here we see some supply enter the market. The next thing we see is a test of supply. The Professional want to take prices up, but are making sure that the supply is out of the market. If there were sellers underneath, then there would be more volume. And if a large amount of supply had entered (more than the demand present) then price would go down on more volume.

The key(s) here are that the 'test' comes immediately after we see supply enter the market showing us market strength. Or, simply put, location and background information. An aggressive trader might enter once the test is "proven" on the next bar that closes higher than the close of the test. Shown here. The reason for the question mark is that not everyone would enter at this point. Some use multiple timeframes, some use price action patterns, and some even use indicators ( ).

To be sure, the market did indeed move up and a quick profit could have been made. In fact, one could still be long as of this pic and in profit using only one timeframe and that repeatable and reliable pattern.

Once you witness Ultra Wide or Wide Spread bars on High or Ultra High Volume, you want to then start looking for bars with low volume. This is where you find no supply, no demand, and some test bars. Sometimes there will be high volume tests or Upthrusts on high volume. An Upthrust is kind of like a high volume test but showing weakness rather than strength. That is, a high volume test will close on or near its high and an Upthrust closes on or near its low. Ideally a high volume test will make a lower low while the Upthrust will make a higher high.

There is a lot more here, but it is enough to say that every No Supply or No Selling Pressure sign in this pic is within the range of a significant Wide or Ultra Wide Spread bar. More precisely, within the body of a significant WRB.
136.jpg

[Sledge]

Once again my 'puter is sluggish as hell- posted wrong text on #136.
Right Chart, wrong Text

[Soultrader]

Please see todays ES video. Thanks

[jjthetrader]

James, nice work bro! Posting a video is way better than pictures. Thank you.

Having said that I'm going to post a pic:-)

My friend Tawe Trader and I were talking this morning about shorting after the second wave of heavy volume (potential selling) to be on the safer side of probabilities.
In my example though we have high volume on a breakout but it's tested very shortly and would have been an ideal place to get long.

Then on our second wave of high volume we get an upthrust and it's low being broken would have been a nice short side entry.

This is similar to SoulTraders short on the ES.

[habi]

	Quote:	Sledge
	We see an Ultra Wide Spread bar with Ultra High Volume that closes up from the previous bar. VSA teaches us that markets do not like Ultra Wide Spread or Wide Spread bars on high or Ultra high volume. Because they could hide selling (supply) within them. Although some times they are indeed strength. Which by the way, much time is spent on in the bootcamp. Because many people after hearing weakness (supply) comes in on up bars automatically assume all up bars are weak.

VSA teaches, that some selling could be in wide spread bars with ultra high volume. As you say, it's important, where the WRB occur in the trend. So it would be interesting, what we have on the left sied of the first WRB. In addition, we should make a different between a WRB, which includes just the range between open and close and a wide spread bar, which is measured from low to high. A bar closing on its high as a single bar is not bearish, even if some hidden selling could be within them. But it means, that the sellers was not able, to push down prices.

In your chart, the first WRB is a bullish candle as long as we don't have a close below it.

In my opinion, the most important bars are those, with high volume. Then we have to find out, what this high volume means. In your example, we have a WRB on very high volume, closing on its high and higher than the three previous bars. Three bars after your long sign, we see a shooting star with high volume an a long upper shadow. This is a sign of weakness. Even if a second WRB is forming, we have weaknes above the shooting star. After the no demand bar, I see already a WRB down and a possible short against it.

The next WRB down has ultra high volume, but closed not on the low which means, that some strenght came in. Since we are on the support from the first WRB, why not a long trade against the no supply bar?

[habi]

Some WRB's and how they worked as support/resistance in the ES 3 min chart. but it was not always easy to find a setup within the WRB zone. Today, strenght came in on down bars before closing the up gap.
The higher volume spike in the middle lead to some more points down in an uptrend.
The last two very high bars where probably created by closing day trade positions. We have to be careful, because we have some weakness in the 15 min chart.

[Tasuki]

	Quote:	Soultrader
	Attached is a .pdf copy of the Ney report. Please read it if you haven't yet. Thanks

Great report, very prescient indeed.

Ney is dead, isn't he?

[mister ed]

	Quote:	Tasuki
	Great report, very prescient indeed. Ney is dead, isn't he?

Hi Taz - yes he is.

I have found some info about him on the net, cut and pasted, and credited to source, into this document (attached). Very interesting.

[speres]

	Quote:	Sledge
	Post #133 Originally, I was going to post this pic in the WRB thread and make the following point. Not all WRBs are created equal. While there may be many factors in what constitutes a significant WRB, the three main are: * Size in relation to other WRBs * Amount of volume * If the WRB is the result of some news related event NihabaAshi is the true WRB expert and may be able to enlighten us as to some of the more reasons that determine a WRB's significant. As I know you are looking at VSA, don't let what I just said about WRBs confuse you. There are three factors that constitute significant bars in VSA as well: * Size in relation to other wide spread bars * Amount of volume * If the wide spread bar is the result of some news related event Now in the chart below we see numerous WRBs or wide to Ultra wide spread bars. However, they are all not equal. Let's just focus on the very first one on the left hand side of the chart. We see an Ultra Wide Spread bar with Ultra High Volume that closes up from the previous bar. VSA teaches us that markets do not like Ultra Wide Spread or Wide Spread bars on high or Ultra high volume. Because they could hide selling (supply) within them. Although some times they are indeed strength. Which by the way, much time is spent on in the bootcamp. Because many people after hearing weakness (supply) comes in on up bars automatically assume all up bars are weak. We know this bar had some selling (supply) once we see that the next bar is down. If all that volume was buying (demand) then the next bar could not be down. What we often see next, if the market is strong, is either a No Supply or Test for supply bar. Here we see a test. This is a low volume test. Note that volume is less than the previous two bars. Note that the test makes a lower low than the previous bar and closes on its high. It hard for me to separate some things, so I must point out that this test bar is in body of the WRB. But from a pure VSA point, note that the test is within the range of the Ultra Wide Spread bar. SIMPLY, A LOW VOLUME SIGNAL WITHIN THE RANGE OF A PRVIOUSLY HIGH VOLUME BAR. Many concepts in VSA are logical. Here we see some supply enter the market. The next thing we see is a test of supply. The Professional want to take prices up, but are making sure that the supply is out of the market. If there were sellers underneath, then there would be more volume. And if a large amount of supply had entered (more than the demand present) then price would go down on more volume. The key(s) here are that the 'test' comes immediately after we see supply enter the market showing us market strength. Or, simply put, location and background information. An aggressive trader might enter once the test is "proven" on the next bar that closes higher than the close of the test. Shown here. The reason for the question mark is that not everyone would enter at this point. Some use multiple timeframes, some use price action patterns, and some even use indicators ( ). To be sure, the market did indeed move up and a quick profit could have been made. In fact, one could still be long as of this pic and in profit using only one timeframe and that repeatable and reliable pattern. Once you witness Ultra Wide or Wide Spread bars on High or Ultra High Volume, you want to then start looking for bars with low volume. This is where you find no supply, no demand, and some test bars. Sometimes there will be high volume tests or Upthrusts on high volume. An Upthrust is kind of like a high volume test but showing weakness rather than strength. That is, a high volume test will close on or near its high and an Upthrust closes on or near its low. Ideally a high volume test will make a lower low while the Upthrust will make a higher high. There is a lot more here, but it is enough to say that every No Supply or No Selling Pressure sign in this pic is within the range of a significant Wide or Ultra Wide Spread bar. More precisely, within the body of a significant WRB.

good post Sledge may I also add that where you see a wide spread bar in a chart or price level is extremely important also . For example a wide spread up bar through a previous area of supply or resistance requires effort and intent from the pro's.