[VSA] Volume Spread Analysis Part II

[Sledge]

	Quote:	dandxg
	Sledge, for the longest time, about a year I used floor pivots for the ES and ER and they worked, but too often price just smoked through them without a pause. Part of problem I believe with using floor pivots is which one do you use? There are 5-6 formulas I believe. I don't post this to rain on your parade by any means, I hope you have better luck with them than I have had in the last few months. Just some food for thought. I do believe in using PDH and PDL and looking to supplement them with some other logical S/R areas. I have been tinkering with MP and to me the it makes sense because it based on PV which is what VSA is, but when the market gaps hard and its far from the previous day MP levels what to do then? This is what I find myself thinking. This is the reason for question above to Eiger about S/R.

dandxg-
No parade raining at all.
I have dabbled with them and found the same thing you did- they can get smoked in a heartbeat, I'll have to go back to my trade journal and refresh myself as to why I gave them up.

*Looking for notes*

Ahh there it is, with SOME success but no real "comfort level" in making trades with them.
Also just as I was getting into fully testing them, VSA broke into my world. Became all consumed with VSA and they went by the wayside.

Trend channels appear to give a better gauge, I am in the early stages of learning them (i.e. how to draw, where to draw.) I had a mini-course lesson this morning on them as a matter of fact!
Sledge

[Sledge]

	Quote:	Eiger
	Remember, I am trading the S&Ps. Cable trends a lot; the S&Ps is more of a counter trend market. Most of the time I will have my exit just below/above the resistance or support as a target for an exit. I know there will be activity there and I want to get filled. If it goes through it and continues, I just wait for a retest of that area or a retracement, and if appropriate, reenter in the direction of the origninal trade. My worries are more about price not making it to the S/R level, which sometimes happens. JJ talked about what price and volume should look like on the approach, and as usual, he is spot on.

Eiger-
I have heard the term "counter trend market" in the TG seminars- but I don't know what that means- can you explain for me and any others who may not know what that means?

As far as having an exit at support or resistance- once again-- logical, SMART! Very wise idea to set your target to the S/R ballpark, take your money off the table and see where it goes from there, utilizing that "down time" to analyze your next move. Golden nuggets of information! Most appreciative!
Sledge

[Sledge]

	Quote:	zeon
	Eiger, two days ago you asked me post some charts explaining what I meant. Right now, there's a very good example of what I was talking about then. This is decreasing volume, on support. So is this strength (no sellers left?) or weakness (no buyers left to pick it up)? This is where I'd take a long trade. Given the odds of my trades, this will probably go down now.

Zeon-
If you are wrong to go long, I'll grab the other oar in the boat and row with you. Just looking at the last six bars on the chart. Looks as if you have a Wide Spread Down bar (Hidden Potential Selling)
You then have climactic action on the next couple bars (look at that volume)
You now have (as the dust settles) higher lows (pro $ buying on the lows on decreasing volume)
The only caveat is this, LOOK OUT FOR A SHAKEOUT at the end of these smaller bars. Very likely to see a thrust downward into the territory of the Climax Bar and then shoot upward!

Sledge

ym_volume.GIF

[zeon]

	Quote:	Sledge
	Zeon- If you are wrong to go long, I'll grab the other oar in the boat and row with you. Just looking at the last six bars on the chart. Looks as if you have a Wide Spread Down bar (Hidden Potential Selling) You then have climactic action on the next couple bars (look at that volume) You now have (as the dust settles) higher lows (pro $ buying on the lows on decreasing volume) The only caveat is this, LOOK OUT FOR A SHAKEOUT at the end of these smaller bars. Very likely to see a thrust downward into the territory of the Climax Bar and then shoot upward! Sledge

It looks like that was exactly what happened, another shake-out and then up went price. But at least price went up, which gives me some consolation...

My target would be the next resistance level. After two "selling climaxes" during the day, surely the pro's have been buying at the low prices and are ready for the mark-up?

Unfortunately as I'm typing this, price has just come down again, approaching the entry-point hmm.

[dandxg]

	Quote:	zeon
	Eiger, two days ago you asked me post some charts explaining what I meant. Right now, there's a very good example of what I was talking about then. This is decreasing volume, on support. So is this strength (no sellers left?) or weakness (no buyers left to pick it up)? This is where I'd take a long trade. Given the odds of my trades, this will probably go down now.

Zeon, FWIW I think you read is spot on, you might want to filter trades like this with NYSE tick, I believe that is what Eiger does? These set ups can be tricky though and IMHO if taking it you would have to defend it to as much as 5 points below the lowest low so depending on where you enter it could make for a big stop. Trades such as these offer the biggest return but also the biggest risk as there is no confirmation as of your chart posting that there is a confirmed change in trend.

Just a suggestion you might wait for it to make a set of higher lows and then pullback on lower volume which could give you indication of a confirmed change of trend. You get less possible points but have more confirmation, pros and cons to each. The expectation would be that you could reasonably assume a retest of the resistance just made at 430-450. As it approaches this range you would like to see a burst of volume, Williams' would call it pushing up through supply ( the resistance range ) and then you would most likely get a pullback on lower volume where one could enter long again.

Hopefully this is helpful. Didn't mean to steal Eiger's thunder as I think he adds a lot to this thread and will be interested to see his response.

P.S. As an important side note I believe, it's necessary to realize that all of these indexes are attempting to form an accumulation base on the daily and this can take a very long time so it's quite possible that the intraday trading can zig zag back and forth in a range. Paraphrasing Williams and Wyckoff accumulation normally take a lot longer than distribution.

[brownsfan019]

	Quote:	CandleWhisperer
	Soultrader or any other moderator. Please note that I have never mentioned the name of the site, the link, or implied if I was sent a pm I would give it. Mark has never done it either. That is not the way he does business. Out of respect to him, I ask that you delete the link to his site. Also since we cannot ignore a moderator, at least they should be required to act like one.

I moderate one area of this forum CW - the candlestick corner. That's it.

Outside of my humble abode, I can interact as any other member.

Lucky you.

[zeon]

	Quote:	dandxg
	Zeon, FWIW I think you read is spot on, you might want to filter trades like this with NYSE tick, I believe that is what Eiger does? These set ups can be tricky though and IMHO if taking it you would have to defend it to as much as 5 points below the lowest low so depending on where you enter it could make for a big stop. Trades such as these offer the biggest return but also the biggest risk as there is no confirmation as of your chart posting that there is a confirmed change in trend. Just a suggestion you might wait for it to make a set of higher lows and then pullback on lower volume which could give you indication of a confirmed change of trend. You get less possible points but have more confirmation, pros and cons to each. The expectation would be that you could reasonably assume a retest of the resistance just made at 430-450. As it approaches this range you would like to see a burst of volume, Williams' would call it pushing up through supply ( the resistance range ) and then you would most likely get a pullback on lower volume where one could enter long again. Hopefully this is helpful. Didn't mean to steal Eiger's thunder as I think he adds a lot to this thread and will be interested to see his response. P.S. As an important side note I believe, it's necessary to realize that all of these indexes are attempting to form an accumulation base on the daily and this can take a very long time so it's quite possible that the intraday trading can zig zag back and forth in a range. Paraphrasing Williams and Wyckoff accumulation normally take a lot longer than distribution.

Thanks for a very informative post. I only mentioned Eiger because he asked me to post some charts, but I prefer posting charts live then get some older charts where hindsight analysis might be easy to do. In this case, I had no knowledge of what was coming after the "long entry". Your contributions or those from other people are certainly appreciated.

It looks like finally I might be getting somewhere. I agree that waiting for further confirmation comes at a disadvantage: a higher entry and less potential for profits. But so is the case in trading, the longer you wait the more convinced you are, but the less potential.

Also, you seem to agree that a re-test of resistance in this case is likely, so this is where my target would be. It remains to be see whether we'll get there, because at the moment price is back at 370 and not exactly in a hurry to go higher by the looks of it.

Finally, I'm also thinking this intraday action last couple of days is building up for another move higher. Glad to see someone think along the lines of what I'm thinking for a change

[brownsfan019]

Ignoring my previous posts to CW, take a look at this one from today guys:




I know this is not standard VSA work, but just take a look and see if it can help in your trading at all.

That's it. I'm not looking to get into an argument about whether that is hammer or spinner b/c it does not matter. What matters is that yet again this week we found another reason to get long using candles and a simple glance at volume. I know that's overly simplistic, but perhaps trading does not need to be so complex...

[Nvesta81]

I'm just a newbie compared to you guys but from my observations I'd say candle formations and VSA compliment eachother very nicely. They sort of go hand-in-hand, no use comparing one against the other. Use both and things become much clearer. I'm sure there are plenty of trades that can be taken just by using candles alone, but VSA can give you a greater understanding of the potential of certain moves. Just my humble opinion...

[habi]

[quote=zeon;32985]Before the market opened today, I identified various support and resistance levels. Like I said in a previous post on another thread, support was at 1337-1339. These are the horizontal blue lines drawn across the chart.QUOTE]


Zeon

Before you focus too much on horizontal lines you should have some ideas about the prevailing trend. In the 15min chart you see a strong uptrend and followed by a downtrend with overlapping waves. As long as this picture not changes you can expect, that the previous low will not act as resistance.

When you was looking this morning on this chart, you saw something like a falling wedge, which has a bullish implication. Additional support came from the regular session gap and the increasing volume was another sign of strength.

In the 5min chart you see strong up candles after the low was in, most with higher volume. The shooting star in this case was just shorttime weakness and the uptrend was confirmed, when it's high was exceeded. The high came then in within yesterday's downcandle.