|
Quote: |
|
 |
|
|
...............What I would like to know ask to the people that tape read on this forum is do you think that candllesticks at key support/resistance levels confirmed with volume bars are in any way an alternative to tape reading? ..... |
|
|
|
|
In a word, yes.
Check out the attached chart. Here is a great example of price/volume action at or just around support/resistance levels.
The first arrow points to a 'test' bar. Professional money is testing for supply. Since the volume is low (less than the previous two bars), we know that no sellers were underneath the market. The yellow line is the
POC.
The second arrow is another 'test' bar. Notice that this test comes higher than the previous test. This one comes just below the
Value Area High pivot line (upper purple line). Again test bar has volume less than previous two bars, closes on or near its highs, and makes a lower low than previous bar.
Next we shoot up to the R1 level. Here we what do we see? As price rises to the resistance level, the effort to rise decreases. The tool above is showing effort to rise (green) and effort to fall (red). Another word for effort is activity and another word for activity is volume. In essence, buying volume is decreasing as price moves higher.
VSA tells us that rising prices on decreasing volume is bearish. But our focus here is on where this is happening: where we would "expect" to see it.
Lastly we again see divergence between bearish order flow (effort to fall) and falling prices. Now we are at the lower purple line, the
Value Area Low pivot. The two pronged arrow points to a bar with ultra high volume that closes in the upper portion of its range and down from the previous bar. This is a bar that had Professional demand (buying) going on. In fact, the bar looks to be a shake-out. A maneuver used to shake out the early longs prior to an up-move.
Time after time, support and resistance areas force Professional money to show itself. These elephants leave footprints that the retail trader can use to trade along side the big boys. IT'S ABOUT PRICE AND VOLUME AND IT IS READING THE TAPE.