[VSA] Volume Spread Analysis Part II

[mister ed]

Hi Sledge - OK - here are my interpretations. Please note this is all with the benefit of hindsight ... very hard to get it wrong using this...
Don't show this answer to BrownsFan OK? Some of these bars are so obvious in candlestick terms ... LOL

1. Well it tried to go up didn't it, 'close' is very weak, on high volume too - failed badly. This is not a bullish bar. Very bearish almost a 'gravestone doji'.

2. Higher volume, tried to go down and closed back on highs - not a bearish bar at all.

Bars 1 and 2 represent a very volatile movement - over the course of these two bars there is a big range and huge volume and tests of breakouts on both sides, both of which have been rejected and net over these two bars there is no change!

Bar 3 - another huge volume attempt to go up, weak close. Not a bullish bar again.

The market has established that there is big supply above, and on the other hand there is still demand on the downside - the range in the bars preceding 1 and 2 still holds.

Looks like soon after bar 3 it enters the Asian timezone given the dramatic fall in volumes.

Bar 4 expands its range and volume,. but it is still stuck in the range with no test of either side.

The bar after 4 is a clear impulsive move - basically a Marubozu candle out of the range - huge jump in volume, close on the low. Clear sign of strong selling entering and a move below the recent demand area.

Bar 5 looks to be a climax bar after the wave of selling that came in from 4 down.
The next bar and bar 6 show declining volume but volume is still good. On the face of it bar 6 appears
bearish - and if it appeared after an upswing it would be,but it must be viewed in context of the recent action,
which is a big down move. It looks like there is continued selling but it is not manageing to go any lower is it?
Lots of effort, not much of a result.

Bar 7 is a weak close, huge volume, after an upswing - bearish again.

[erierambler]

	Quote:	Sledge
	Ok Pop-Quiz for the Pro's and Learning time for the noobs or anyone in between. Can anyone Define marked bars 1 through 7. All the info needed (Volume) is below. The Admins can grade the papers when all have finished! 1.up bar closing down, can't see background to tell if it is an upthrust 2.hammer indicating potential support 3.failure to make a higher high, rejection on high volume 4.test 5.stopping volume 6.same as 5 7.upthrust Attachment 5239

erie , just filled in the blanks, hope this works..............

[Sledge]

Ed-
Ahh yes, wonderful start to the exam, I'd like to hear more as well from other classmates as well. I'd like to hear how Each trader would read these bars. Granted you do have the benefit of "after the fact" but if you take each bar as if it were the bar of the hour (this is a 1 hour chart) and it was happening real-time (without the benefit of the right side of the chart to give you cliff notes)

Extra Credit Question:
Maybe we make it more interesting- look at the last 4 Bars and tell me what you see- I see weakness on the up move and the market may open at start of week climbing, but I anticipate a decline....

[mister ed]

The last few bars of the week in FX are often characterised by a squaring of positions into the weekend so it appears the market was weak and shortish - on the basis of the info in this chart you would still be bearish but I think you may well have to wait until European open to see further selling. US exchanges closed on Monday too.

[CandleWhisperer]

First post. I will jump into the fire. Hope you are grading on a curve.

1. Up thrust : First bar on chart is up bar on heavy volume. Next bar is up, but on a narrow range with less volume. This is weakness.

2. Failed test : Close on the high of the bar, but volume is too heavy. This is weakness.

3. Trap up move : This could be called another Up thrust as well.

4. I'll have to pass on this one.

5. Climatic action: ultra high volume closing off the lows with the next bar down.

6. No supply.

7. Up thrust : Strength came into the market, but could only move the market sideways.

[Brun]

Not an expert!

Based on the bars prior to bar 1, buying is met with supply on high volume (note the 1st two bars…a wide spread up bar followed by a narrow spread up bar both with very high volume) Sign of Weakness

1. Upthrust
2. Effort to rise (possible failure due size of spread versus volume)
3. Buying Climax

There appears to be some no demand bars between 3 and 4.

4. Up bar closing in the middle with volume less than the 3 and 1.
5. Stopping Volume
6. Test Failed
7. Upthrust

Brun

[rsi]

Tried to copy the answer given by other students here. But I could not as the handwriting was too bad to read

So I am trying on my own as I have no other alternative

1. Upthrust

2. Stopping volume? Any way, I will not jump in to trade on the very next bar as one of my teacher (was it soultrader himself?) told me to wait for the completion of next bar. He also told me that by doing so I will be able to reduce bad trades considerably. I have to heed to the advice of the teacher. So wait and watch. Bar 1 and 2 taken together means that price is not going either upward or downward. So let the market decide where it wants to go. Then jump in to it.

3. Another move to trap over eagerly bulls. Upthrust

4. Wide range bar which closes in the middle with huge volume. Examination of earlier bars shows that prices were already in a nice uptrend. Prepare for a downmove.

5. All that I can say on bar numbered as five is that I will not take any trade either on this bar or on the next bar. Price was already moving down for three bars continuously prior to bar numbered 5. Volume was heavy on all four bars. Noted that all four bars including bar numbered 5 are WRBs. Apprehensive to short more and equally apprehensive to go long. Wait and wait. Price will either move sideways or reverse shortly. I am not going to attempt to board the train before it stops in the station. Let the market show its hand.

6. Ditto for bar numbered six. No clear sense of direction. Volume is decreasing. With clear weakness in the hindsight, it is clear that sellers are exhausting themselves, but close of the bar on its lower bottom tells me that buyers are not at all enhused inspite of seeing all prior bars. So I will wait for another opportunity for what? To short.

7. Didn't I tell you not to be in a hurry to go long? If you have gone long now repent. Action at bar numbered 7 emboldens me further to short. See even after all the WRB down movement, there is no buyer. That means price will not go up. Price will move down. I will short at the opportunate moment.

8. Action at the hard right edge. Another classic message from the market that there is only weakness. Short on the close of the bar below the low of the last bar with a stop a few ticks above the high of bar numbered seven. Still conservative stop could be just above the low of congestion in the area between bar numbered 3 and 4.

Tell me teacher, have I passed the test? If I have failed, do not tell my dad and mom. They will scold me like anything. If I have got more than 80% marks, do tell my dad and mom. They will be happy. If I have given a wrong answer tell me why I am wrong and where I have gone wrong. I will try to learn.

[speres]

bars 1,2 and 3 some shaking out going on

1. upthrust, suck in weak longs
2. prices marked down rapidly, catch weak longs stops, suck in early shorts
3. prices marked up again, catch weak shorts stops, draw in more weak longs
4. price attempts rally, pushed back down. vol not great, no real interest in goin higher
5. high volume bar with a tail. some profit taking here
6. price has found temporary support on this bar
7. upthrust

[Sledge]

This is GREAT! Keep it coming. I thought this may be a handy way for everyone to interpret the chart and tell what they see. I'm amazed at how we all have (in some cases) a different way of reaching a conclusion.

Ed and RSI seem to be the only ones answering the Extra Credit question though.
Nice job all so far!
Sledge

[Sledge]

	Quote:	mister ed
	The last few bars of the week in FX are often characterised by a squaring of positions into the weekend so it appears the market was weak and shortish - on the basis of the info in this chart you would still be bearish but I think you may well have to wait until European open to see further selling. US exchanges closed on Monday too.

This is an excellent point made by Ed- Fridays in Forex tend to be wacky times and "squaring of positions" is a very fitting and proper description!

Also with Monday being a U.S. Holiday you may very well see the market act a little strange on Monday- if the US is closed- London will have it's way with the Forex Market all the way until they close without US intervention.

Two excellent points for anyone who is new to trading or the Forex Market Ed!
Sledge