Sledge

After seeing a post regarding "Interpreting Bid/ask Spread" on this section I thought I may ask/discuss price action: Basically, if you watch a 1 Min Chart and activity is high you can see a bar bounce up, drop, rocket back up etc all within that one bar for simplicity sake lets say this bar closes DOWN but on the middle of the bar. My opinion (based on VSA) is that if you see a bull trend and catch a slight downturn, you may see the price drop on the bar, at the bottom of the bar you see buying and the bar comes back up to middle, you see it drop again and rise before your eyes. This is obviously absorbtion of the orders and buying on the low. My question is that this doesn't happen all the time, you can see a bull trend and some of this absorbtion, but then the bar closes in the middle, and the trend continues downward. Can anyone offer any insight on this? I would like to think that if you are watching price action and the bar closes in the middle that it is a strong buy signal (as the selling is being absorbed to make way for higher prices) As I study VSA I find that I can learn more by watching the bars on a fast timeframe. Since I have no trades in- I can just watch as if I were watching a TV show- but this one is stumping me at the moment. Thoughts? Sledge

BUT You can use your brokers TICK Volume because it is relative! Say at any moment their are 100,000 contracts trading hands. Even though your broker is not handling all 100,000 contracts- they will be handling a certain percentage- consistantly. It is the same as taking a random sample in Marketing- if you don't have any specific demographic and you just want to know what the country is thinking on a topic (opinion poll.) You can take a random sample of 1000 people you see on the street. When you get the percentage of their answers- those percentages will be a good indicator of what the country as a whole would say- without having to ask every American their opinion. So in essence one brokers tick volume will be on par with the market as a whole. Sledge

Torero- Yep, been to the NDD forum. Good group of folks over there. Guess I'm still wondering what the "formula" is that they use to determine their swap $ though. "Ok every other Wednesday when the moon is in the 3rd house of the sun- on Long orders we will give the traders $17.62. The day after we will give them $1.32 on the same lot amount- sound right?!" Oy! Sledge

Well I am working diligently on mastering VSA- which would indeed lead me to be able to trade ANY currency or anything in the world for that matter so I'm sure I will get back to diversifying- I actually took a JPY/USD trade today for the first time in probably 6 months because I saw a good set-up this morning. Cable, EUR and, CHF are rangebound right now- guess I needed some excitement as my Cable is in range-bound frustration hell for the moment. Sledge

Quick def: if you hold a position past closing you get "Swap" money deposited into your account, sometimes called Rollover as well. Ok, at one time I had two brokers and would watch this fleecing of my account. I'd place 1 (2.00) GBP/USD LONG order on 1 broker and 1 LONG on another: Broker A would TAKE approximately $5 from me at the end of the day. Broker B would GIVE me $5 at the end of the day on a 2.00 Lot of GBP/USD Now yesterday (Monday) I was in a Short position that happened to close out after EOD. My broker TOOK $30 off me on the Swap on a 2.00 Lot. I have been in this game for a while now and cannot for the life of me figure this out- If I am Short on the pound I EXPECT the interest rate difference of the USD and GBP multiplied by my lot size to be deducted from my account. If I am LONG- shouldn't the dollar amount of the swap be the SAME? I.E. If I am short 2 lots of GBP I should get a -$30 Swap On Day two I am Long- should I not get a deposit of $30? Seems as if I'm getting hosed- if I'm long I get $5 dollars- if I'm short they take $30- Seems a shady bunch of B.S. if you ask me! Also in the first example above- the Broker who always took from me on longs and shorts- were cut from my trading life- hard enough to make money in this game without being stolen from also!

I trade GBP/USD exclusively and wondered if their are any folks here that tend to gravitate to this particular currency pair. I find it to be a much needed "old soul" in the Currency Market- Trading Yen is for the brave and thrill seeking, EUR seems to be the flavor of the day currency as every noob in the Forex Trading world knows it is where "the action is" CAD seems boring to most (not enough excitement) and the list goes on and on. I gravitated towards GBP for it's consistancy. Just wondered if anyone here tends to trade it quite often or specialize in it? Sledge

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

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

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....

Soultrader- Thanks for a great post. Stage 4 right now and the dream is to one day be able to go to my wife and say: "Honey Look- I can legitimately make more money by quitting my job and trading full time" I have already and regularly make more money before 8:00 AM than I will working my day job- it feels good, yet frustrating at the same time- making a nice $400 score prior to going to work for 8 hours- to make 1/4 of that- makes you a bit frustrated. But that is why we have dreams and to keep working towards them! Sledge

Ok here is the $64,000 question, we all know that when a trend is drying up, that volume decreases- but the real question is- WHEN? You see decreasing volume but unless you become an expert chart reader- you won't know exactly when the turn in trend will take place!

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. 2. 3. 4. 5. 6. 7.

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

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.

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.

I too have been frustrated with my trailing stop being way to tight. The first one I ever tried I was shooting for a 65 pip profit and trailed it with a 15 pip trail overnight. My 65 target was hit- but when I looked at my account- I had a measly 5 pip profit. Why? Trail was too tight, I didn't give it enough room to run, my target was reasonable and attainable, but fear made me plop that 15 pip trail on a 65 pip target. I left 50 pips on the table that night while I slept. Best method for me is if you have as an example a 50 pip target- trail it by 30 or 35 pips. GIVE THE TRADE A CHANCE- but be wise in protecting your trade. If I have read my charts correctly and a 50 pip target is reasonable, I may even put a 40 pip trail on it. Wouldn't you be happy with 40 pips instead of negative pips if your 50 target isn't hit? Took me quite a while to figure this out- I left bunches of $ on the table as well and beat myself up about it until I found what worked for me. Hope this helps! Sledge

Ed- Apparently PP doesn't feel the same-- here is a PM I got from him: STOP TRYING TO SPEAK FOR ME -------------------------------------------------------------------------- YOU AR NOT ME. USE YOUR OWN CHARTS AND OWN EXAMPLES. IF I CAN I WILL BE DELETING THE TEXTS AS WELL. My witty reply was unable to be sent to his mailbox (full!) I'm sure with the combination of him deleting his work and sending sweet messages like this to all participants re-posting his charts, his mailbox is completely swamped with demand for answers with little supply to go around.

Unicorn- Sorry, I have too many Word Docs Open at once- you are correct and I guess my time to edit my post has expired, your text for that post is indeed correct! Sledge

Post #121 One thing that I am very struck with is the overlap one finds in " things that are true" across various methods. Take for example the chart below. Notice that we have a valid High Close Doji pattern. This pattern appears within the body of the WRB and the following Ultra Wide Spread bar with Ultra High volume. Take a look at the test bar. VSA tells us that a test bar is when Professional Money "mark" prices down to see if there are is any supply (sellers). VSA, however, does not look at the open of the bar. But look at what we see if we do. First, we see that this bar is a doji. In candlestick terms this bar represents indecision. More over, the close on the top means price was rejected as it moved down. This is not unlike what VSA tells us. When we look at the entire bar, what must be the way the bar played out? The bar opened up, went down and the price came up to close right where it opened. Clearly, we can see that Professional Money "marked-down" the price only to take it back up again. In this case, we have a "perfect" example of the true intentions of the Smart Money. If the open had been lower on the bar, we would of course still have a test, but the picture would be different. For example, if the open was at the low of the bar, we would still have a test, but we would not get a sense of the "mark-down". Note that the other labeled test candle opens in the middle and closes on its high. We do see the action (mark down-price rejection) here as well. To be clear, tests come in various forms and the key is the volume and the close. But some tests are more reliable than others. Volume plays a role here but so does the open. Tests that are also dojis tend to be the optimal type of tests. To those that use candles, this makes sense. Hammers with long shadows also make ideal test bars. Two methods reaching like conclusions. It should be pointed out that a test bar needs confirmation. Ideally that confirmation comes on the next bar with a close higher than the close of the close of the test bar. If that confirmation bar closes higher than the high of the test bar and it (the test bar) is a doji, well, now we have something..............

Post #120 This post builds on post # 114. After the up move in price what happens next? There is on thing we want to keep in mind; we had a couple of Gaps on the way up. Gaps are usually filled. They can at times, however, act as support and resistance areas...... Let's look at the what happens when a test fails. The first thing you will notice is a WRB. Not important to VSA but oh so telling to the rest of us. The best places to see tests, upthrusts, and no supply/no demand bars are within the body of a WRB or shadow of a Long Shadow candle. We have our WRB in place. This creates a natural support/resistance zone. Next we see a narrow bar that closes near its high, closes equal to the previous bar, and has Ultra High volume. THIS IS A HIGH VOLUME TEST. Smart money is looking for sellers and is finding some. While it is true that sometimes the market goes up on high test, it usually does not go up far and then comes back down to re-test the area. As always the next 1 or 2 bars need to be considered. To actually confirm the test we need to see one of the next 2 bars close Higher than the close of the test. Otherwise, we have a failed test. Notice what happens here. The next bar is down and then the bar after that is an up bar but closes equal to the close of the test bar. Now, look at the next bar. We have an up bar that closes in the middle to slightly up on relatively high volume. It is not as high as the test, but it is still high. Up close (from previous bar), on high volume closing near the middle: This is supply entering the market. At this point, we have a FAILED test on high volume and more supply showing up. The very next bar closes on the high with volume less than the previous two bars and closes higher than the previous bar. This is no buying pressure. As it would happen, the high of this bar is equal to the close of the WRB. TG WONT TELL YOU THIS. Then we get the next bar down. From a VSA point of view, now is the time to go short. * the test of supply has failed. * New supply entered. * No buying pressure. couple that with the fact that there are gaps below and all this is happening at the low of the S/R zone of a WRB. Now let's take a look at a test that does not fail. I would first point out that from a time of day perspective, this is not an ideal time to be entering a trade. It all starts with a WRB. We have an Ultra Wide Spread bar on Ultra High Volume that closes on the low. But the next bar is up. If this bar is up then there must of been some buying in the previous Ultra Wide Spread bar. WRB analysis tells us that changes and shifts in supply/demand occur in WRBs. More reasons to think something is indeed going on. 3 candles later, we see a narrow range candle that closes on its high, makes a lower low and has volume less than the previous two bars. THIS IS A TEST. Technically a possible test, as we do not have a confirmation bar yet. Confirmation comes 2 bars later when we see an up bar that closes higher than the close of the test bar. First possible entry point, with no regard to time of day. If you missed that point there is another. We get a bar that closes on its low, has a narrow range, has volume less than the previous two bars, with the next bar up. THIS IS NO SELLING PRESSURE/NO SUPPLY. What is nice about this bar is the volume. While the test volume was lower than the previous two bars, it was not as low as the volume on this bar. More evidence of the lack of sellers underneath. Also note that we are within the range of the WRB as on this bar. So we have a second chance entry which may in fact be the most ideal entry of all for some (leaving time of day out of the equation). Back to the test candle. Some may note a hammer line that appears to traverse into a bullish white hammer pattern. It does not. But if you had mistaken it as such, here too, time of day should have kept you out.

Post #114 BEFORE & AFTER: I have attached two charts. The first is the before and the second is the after. Let's look at the before. For me the key concept comes thru at least a basic understanding of WRBs. Of course, VSA doesn't look at the open, but I think much is missed if you don't. More over, I think that if VSA did, they would come to the same conclusion. And in fact, they DO come to the same conclusion partially when dealing with wide spread bars (more on this later). The first bar with the double arrow is a wide spread bar that closes in the middle on ultra high volume. Supply enters the market on this bar. Not a place to go short. The reason: the reason is explained in the next highlighted bars. The next bar we have is a Long Shadow and in VSA terms, it is Ultra Wide Spread bar on high volume, that closes lower than the previous bar, and closes in the upper portion of the range. DEMAND entered the market on this bar. Now, here is where I depart from VSA. We now have a Long Shadow that creates a support/resistance zone. We also see that this Long Shadow tells us that demand overcame supply on the lower portion of the bar. Not to mention, this bar is a Doji (close=open). VSA does not care that it is a doji, yet the conclusion that something is changing in the supply/demand dynamic is the same-Buyers came in on this bar. Still not the bar to get into the market on. The next key bar is a WRB. WRBs also tell us of shifts or changes in supply and demand. Then we get a No Demand bar. Again not a bar to enter on. What we need to see is something happen within the RANGE of the WRB AND OR THE RANGE OF THE SHADOW OF THE LONG SHADOW BAR. Ideally, the market will move back down and give us a No Supply or Test within these ranges. Then we should be looking to go long. And that concept is what Todd does not say much about. Clearly, he would not talk about within the context of the WRB because he does not look at the open, but he can talk about the overall range of the Ultra Wide Spread bar. In other words, even though he would not know it is a Long Shadow, he would recognize the bar as Ultra Wide Spread and thus should be used as a matrix to measure what comes. The next chart is the AFTER. We do indeed get the No Supply sign in the range of the WRB and the Long Shadow candle. Once we have the confirmation bar up, the next bar, we get long at the close of that bar/open of the next bar. Note that there are two gaps and gaps are usually filled so we need to keep that in mind.

Post #107 If there has been a theme to my posts recently, it is summed up in the word: CONTEXT. I am learning to use candlestick patterns as a secondary method. By that I mean, entry set-up signals. VSA and WRB & Long Shadow analysis are the primary methods and are used to understand the contextual backdrop thru which a candlestick pattern trade can be taken. Take a look at the chart below. We see a WRB on Ultra High Volume. VSA tells us that markets do not like Wide Spread up bars on Ultra High Volume. Because there could be hidden selling in the bar. Now check out the very next bar. This bar has almost as much volume as the WRB, in fact it has 3 ticks less. BUT the range is much more narrow and the bar closes in the middle of its range. This is a transfer of ownership bar. The Smart Money is dumping supply into the market. As retail traders rush in to get long, the Smart Money is all too happy to sell to them. Like I said, we need to always be aware of who is on the other side of the trade. While this bar is up, on high volume it is not "up volume". Most volume indicators and volume analysis would assume it is positive. But we know better than that. A few bars later, we see a narrow bar that close up from the previous bar and closes in the upper portion of its range, but on volume less than the previous two bars. This is No Demand. Professionals are not interested in higher prices at this time. At this point we have context. Supply has entered the market. Note that price overall begins to move sideways. There are some who would go short after the No Demand with the background selling that can be seen. This is a personal choice. For me, all that the context says is, "now is not the time to be going long". I need to see some candle pattern, preferably within the range of the WRB, to get me short. (if you look at a chart from today, you will see that price plummeted after the jobs report). But my point is this, the context, or story, at this time says more about NOT going long than simply get short. A Tradeguider "sign of weakness" might appear on the transfer of ownership bar. It would therefore look like the top was called and thus possibly sold. This is the error that most indicator only traders who look at TG make.

Post #106 What did they know, and when did they know it? OR the importance of Volume. Here is a chart of some of today's price action in the Euro. What is telling here is the actions of Professional Money PRIOR to the news release. We can see when they begin to position themselves and on what side through the use of VSA. Almost an hour beforehand, we see an Ultra Wide Spread Bar with Ultra High Volume, that closes down from the previous bar and closes in the middle of its range. This bar represents a transfer of ownership. That is, the Professionals are buying from the retail traders. Why would they be buying prior to a usually volatile news release ? Seems like a risky thing to do. Could they already have an idea of what it will say? Now VSA tells us that if this is the case, we would expect that if they are BUYING now, they will be SELLING into the release itself for profit taking. Especially If the news spurs the retail traders into entering the market on the long side. However, if the retail trader is believes the news to be bearish, they (Smart Money) would be BUYING more. That is, if the retail traders are getting short, who are they selling to? So we should see both Professional selling and buying. We don't expect then to get net short in other words. Check out the large dark hammer as the news is released. There was some profit taking on that bar. But the bar has ultra High volume, closes on its low with the next bar up. Some buying must of taken place as well. More exactly, they took profits and then began buying as the retail traders (weak hands) rushed in on the short side. We always want to consider "who is on the other side" with VSA. Usually, its the Smart Money and that is not good. I should say, without VSA it's usually the Smart Money and that is not good. Note that price did begin to fall for a few bars. But then we get a dark hammer line. The Long Shadow of the hammer line happens, not so coincidently, to trade into the region of the First candle mentioned where the transfer of ownership begun. The Smart Money is becoming aggressive on the demand side. They are locking in the weak holders (retail shorts) as they know price is going HIGER NOT LOWER. The down move and the dark hammer itself may have even pushed some weak longs out. If you look at a chart beyond the time shown here, you will see the strong up move that ensues. 1. The Smart Money began getting long (long) prior to the News. 2. Some used the event to take a bit of profit. 3. Most got even more long (demand). 4. Once the weak holders where short, price found support in a such a way as to knock out weak longs and lock in weak shorts. 5. what can not be seen in this picture, is a large inverted white hammer that represents the last effort for the weak shorts to get out at break even if the bought on the news release itself. When we use VSA we get a 3 dimensional picture: volume, range and price. Ignoring one of them (like volume or keeping volume constant) is like cutting off one leg of a tripod...............

Post #71 Nice Bullish White Hammer pattern. Note that the white hammer line is inside the range of the Ultra Wide Spread Ultra High Volume candle. When we take a look at the WRB, we see a down candle that has an ultra wide spread and closes on its low. There would appear to be heavy selling pressure in this bar. BUT THE NEXT BAR IS UP. If that bar was true selling, then the next bar would not be up. In fact, if one looks at what price did after that bar it moved up. Clearly, the Professional demand created an upward drift in price. Simply, that WRB must of been a shift/change in the Supply/Demand dynamics of the market. Now note the large dark Candle just prior to the shaded area. This candle closes on its low , closes lower than the previous bar and has volume less than the previous two bars. This is No Selling pressure. The close on the low fools the retail trader into seeing weakness. The lack of volume, however, is the real clue. Price does move down a bit and create the bullish hammer pattern. Note that the hammer line itself is a VSA shakeout/test bar. This is the "ideal" set-up. We see strength come in using our primary methods (VSA and WRB) and then we get a buy signal via our secondary method (Japanese candlestick patterns).

Post #133 I just wanted to show something that might help. 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.