[VSA] Volume Spread Analysis Part II

[Marsupilami 10]

VolumeJedi,

 

Your posts are great, please keep them coming in 2009,too !

 

with regard to your latest post, I can see that you use fibs, but what is the yellow line at circa 1.3835 based on ? Is it related to Gann / Murray Math ?

 

Just curious

 

 

Regards,

Mars

[VolumeJedi 10]

VolumeJedi,

 

Your posts are great, please keep them coming in 2009,too !

 

with regard to your latest post, I can see that you use fibs, but what is the yellow line at circa 1.3835 based on ? Is it related to Gann / Murray Math ?

 

Just curious

 

 

Regards,

Mars

 

Mars, you're very kind to say that.

 

I have attached two charts with what I have been using lately. The first chart shows price from Friday with the full modified Alan's box only. I like this, but I think it takes away from price action a bit. It is pretty cool how we see a no demand in both time and price where we would expect it. This box was drawn after the close (1700 est.) on Thursday and ran until 1700 est. on Friday. However, the Forex market closes an hour early on Friday. 24hrs on 4 min chart equals 360 bars in the box. 360 is a perfect circle (Gann).

 

The second chart shows the box that would be used for Monday. The lines on the left are "harmonic pivots" and are another set of lines based on Murrey Math (base 10 set inside an octave of music). Like traditional pivot points, these lines are based on HLC. The box uses HL for the lines and TIME for the angular set at 45 degrees or 1x1 (Gann).

 

In the end, I am trying to find the right amount of HUPs (Hold Up Prices). In fact, rather than calling them HUPs, I prefer the term Focus Lines. As price moves towards them, you focus your attention on it. Take JJ's last chart for example, that two bar reversal at the poc followed by a no demand would be a perfect trade. The fact that it occurred on a focus line only helps because you would be focused on the chart as price moved towards it.

[CandleWhisperer 10]

VJ,

 

Do you really think the smart money is using murrey math or movement of the planets to make trading decisions?

[VolumeJedi 10]

VJ,

 

Do you really think the smart money is using murrey math or movement of the planets to make trading decisions?

 

Take a look at the Alan Box. It is basically a box that takes the high and the low of a period and calculates the fib ratios of that distance. The golden mean ubiquitous in the universe.

 

But let's keep this about VSA. Generally speaking, signs of strength coming in on a fib line are more powerful than random ones. If only for the fact that it allows a trader to under trade in frequency. You're not taking every no demand bar on a chart, only certain ones. The fact that the BBs continually show themselves at these levels gives confidence in the levels however they are formed.

 

Take a look at the first chart from the previous post. I doubt seriously if the BBs are sitting there saying "we have a circle of conflict above us, so let's not be bullish". However, from our stand point we see weakness in the background. The trend is obviously down. Then we see rising prices on lower volume. We see a wide spread up bar on increasing volume, and VSA tells us markets don't like this kind of bar. Then we get a narrow range bar (NR7) on volume less than the previous two bars. Classic VSA sign of no demand by the BBs. It has added weight because it appears to be coming where there is natural over-head resistance. More than anything, the circle would cause you to pay more attention as price moved towards it. Which in turn means you are less likely to miss the no demand and be more likely to pull the trigger. And that is what it is all about.

[VolumeJedi 10]

VJ,

 

Do you really think the smart money is using murrey math or movement of the planets to make trading decisions?

 

Funny how things work. LOL. I just got done watching a couple of videos on the TG website. (I know, I need a life ).

 

In the first video a wide spread down bar closing near its highs on ultra high volume with next bar up appears. Gavin gleefully states, " There are no accidents in these markets ladies and gentleman". Then he proceeds to place a fib tool on the chart by drawing a line from the high to the low. To the tick, a 32.8% retracement.

 

In the second one, somebody asks him if he uses fibs. Of course you can't hear the question or see it but Gavin replies, "Yes, I do use fibs and some other things but I an not going to discuss them in an open forum. I will tell you this; the number 4".

 

Now the reference to the number 4 could be Murrey Math, could be Lucas Numbers, could be time cycle or it could be a biblical number reference among any other number of things. But in both videos he admits to using fibs in one way or another. The statement "there are no accidents" infers that either the BBs use them or a force greater than themselves comples them to act around these numbers. Now that I think about it, I think I read somewhere that Tom only wanted VSA signs, pivot clusters, floor pivots, a channel drawing tool and fibs in Tradeguider originally.

 

So while this doesn't prove that the Smart Money cares that Pluto is in retrograde with Venus; and I suspect they don't. It does seem to imply that a rudimentary understanding of Fibonacci (or its cousin Murrey Math) is shared by most BBs.

[jjthetrader 10]

VJ,

Do you really think the smart money is using murrey math or movement of the planets to make trading decisions?

 

A wise trader I know says "a line is just a line until we have reason to beleive otherwise."

 

In VSA we're looking for areas for our setups to occur. We don't just want to take them in the middle of nowhere. I use market profile levels as well as floor trader pivots. I also use Fibs, here's why. Every move has to have a retrace right? Professionals have to pull back to reload, it's the nature of the market. So where will they pull back to? Well they'll pull back as far as the have to until they find support or an exhaustion of supply (in a rally). They keep testing until they find this area. Because of the enormous amount of support and resistance traders, this often happens on Fib levels. If I do not see any weakness in the background then I will watch these areas for a reason for the line to be more than just a line.

So there is a reason for the professinals to test these levels. All day they move, test, move, test, move, test and on and on.

 

I have no experience with murray math or anything like that but the market does move with symatry so these points can be areas of interest to strengthen your convicion in your VSA setup.

[delta 10]

hi,

I have tried to label vsa on this chart . ofcourse this is my first shot at

vsa so please comment how should I improve. thanks

niftyvsanalysis.pdf

[tawe trader 10]

Delta,

 

It looks pretty good to me. Thanks for posting and sharing.

 

Regards

Tawe

[tawe trader 10]

EUR/GBP Forex trade - 7 min chart

 

As regular visitors here would know, I pretty much focus on the FTSE 100 index but currently in the UK, the value of the British Pound to the Euro is in the news nearly everyday, due to the fact that's it's getting near to 1:1 parity. Seeing that we are going into the xmas holiday period and the FTSE future volume and activity was fairly low this morning, I thought I'd have a look at the EUR/GBP currency pair, out of interest and I noticed a potential VSA setup.

 

At 10.44am this morning we have a wide spread up bar on high volume closing off the high, signalling possible weakness.

 

Next we have a channel break to the downside, followed by a no demand in a falling mkt, classic VSA.

 

I went short after the low of the ND was broken and I exited for a quick 20 pips, a couple of bars later.

 

In hindsight I should have held on for at least another 20 pips and used an old high of 0.9433 (dashed grey line) as a exit target, as the mkt declined to this level before going sideways.

 

Tawe

[jjthetrader 10]

I'm with Tawe trading the forex market today.

 

Here's my cable trade. Strength entered into the market but those lows still need to be tested so I felt goof about the R:R on the no demand trade I took. The enclosed chart is marked up with explanations. Currently cable is still moving down.

[zdo 20]

A wise trader I know says "a line is just a line until we have reason to beleive otherwise."

 

I like 'a line is just a line until you get there'

 

You all have nice holidays ...

[tawe trader 10]

You all have nice holidays ...

 

I second that and in case I don't post again, everyone have a great xmas and a Happy New Year.

 

There are some first class contributors to this VSA thread, so hopefully the quality postings will continue in 2009 and we can all keep on learning.

 

All the very best to you price + volume traders.

 

Nadolig Llawen from grey and damp Wales.

Tawe

[VolumeJedi 10]

EUR/GBP Forex trade - 7 min chart

 

As regular visitors here would know, I pretty much focus on the FTSE 100 index but currently in the UK, the value of the British Pound to the Euro is in the news nearly everyday, due to the fact that's it's getting near to 1:1 parity. Seeing that we are going into the xmas holiday period and the FTSE future volume and activity was fairly low this morning, I thought I'd have a look at the EUR/GBP currency pair, out of interest and I noticed a potential VSA setup.

 

At 10.44am this morning we have a wide spread up bar on high volume closing off the high, signalling possible weakness.

 

Next we have a channel break to the downside, followed by a no demand in a falling mkt, classic VSA.

 

I went short after the low of the ND was broken and I exited for a quick 20 pips, a couple of bars later.

 

In hindsight I should have held on for at least another 20 pips and used an old high of 0.9433 (dashed grey line) as a exit target, as the mkt declined to this level before going sideways.

 

Tawe

 

I'm with Tawe trading the forex market today.

 

Here's my cable trade. Strength entered into the market but those lows still need to be tested so I felt goof about the R:R on the no demand trade I took. The enclosed chart is marked up with explanations. Currently cable is still moving down.

 

 

WOW.

 

The wealth of knowledge that this thread provides continues to amaze and delight. Thank you both for your participation. Enjoy the holiday season and have a prosperous new year both in trading and life in general. (But don't get so prosperous that you feel posting is a waste of time ).

 

I also like seeing more currency trades. WTG.

[winnie 10]

Dear all,

In analysis the US stock market, which index should we use in analysis the general market condition. Some use Dow Jone Index and some people use NYSE index. Which one should we use ? Where could we get the daily volume chart in web ? In Bigchart.com, I could get the price volume chart of NYSE but the volume is delayed for one day ?

thanks for all your kind help

Winnie

[jjthetrader 10]

Dear all,

In analysis the US stock market, which index should we use in analysis the general market condition. Some use Dow Jone Index and some people use NYSE index. Which one should we use ? Where could we get the daily volume chart in web ? In Bigchart.com, I could get the price volume chart of NYSE but the volume is delayed for one day ?

thanks for all your kind help

Winnie

 

Hey Winnie, does your data provider give you access to markets which you don't subscribe to real-time? IQ feed offers delayed data for everything that you don't subscribe to. Personally I've started to use the YM daily data for what you're talking about.

 

 

Happy holidays all!

[Eiger 10]

Happy Holidays everyone!

 

See you after the New Year,

 

Eiger

[giraia_br 10]

hi.

 

page 200 looks like a good point to start to post.

 

i need read the entire VSA thread 1 and this thread too. But i need to post a pattern i saw today in Forex. I see people took 2 trades in Forex today but the best pattern i saw today was in USDCAD. The bar before the top was what i believe a super buying climax and the next bar was a very narrow spread bar. A "doji". I believe this was a ND bar.

 

this is correct? I was introcued in VSA by speres who already posted in this thread. It was 1 year ago but i found the book too much difficult and gave up with it. Then this year after read some advices i decided to try it again. Then i am reading Master The Markets again.

 

i will very gratefull for any comments. And sorry for my horrible English.

[VolumeJedi 10]

Entries Galore

 

This chart offers a good opportunity for some learning. The question for you is, what entry do you prefer (either the ones number on any other)? I will start with enter #4 first.

 

#4: This should look familiar as it has many of the characteristics of the currency post by Tawe Trader.

 

We have weakness entering on the first bar marked SOW. This is a wide spread up bar on ultra high volume with the next bar down. There must have been selling within that bar. This is one reason the markets don't like up bars on ultra high volume. Two bars later, we see another wide spread up bar on ultra high volume closing of its high with the next bar down. At this point, The channel is drawn. Whilst there was a discernable up trend in place, this may be a bit early to draw our channel (more on this later).

 

We have seen some up thrusts, and some squats. Then we see a no demand right before we fall out of the channel. This entry is on a squat. It is an up bar with a narrow range on increasing volume closing just off the middle of the range. This is a weak bar. The narrow range on increasing volume tells us that something is keeping the range narrow: over head supply. Price outside the channel, weakness in the background, higher volume bar with a narrower range closing up. Time to get short. Unlike Tawe's example we have a squat rather than a no demand. Nevertheless, this is a good place to get short.

 

#1: Check out bar number 1. It is an up bar on high volume closing off its high with a narrow range. This is a squat. But look at the next bar it closes down and near its lows. Put the two bars together and we have an Up thrust over two bars. So here we have weakness behind us, we are in the upper portion of our channel and we see an up thrust. The aggressive trader might enter on this bar. Tom Williams says up thrusts (in the right place) are some of the best bars to go short on. There is room to the bottom of the channel where we might expect to see demand enter.

 

#2: In case you missed it, the market gives you another opportunity to get short on another squat. Note that we are at the middle of our channel and finding some resistance. The bar fails to close above our middle channel line.

 

#3: Here is where things get tricky. If you prefer to look for a no demand after an up thrust, this is your bar. It has volume less than the previous two bars with a range less than the previous bar. In fact it is a NR4 bar.

 

But let's take a closer look at the situation. The previous bar had demand come into the market. It closed within the channel, even though it traded out of the channel. If you look at the no demand, it is supported at the low by the channel line. And we are now in the lower quartile of the channel where we would like to see tests, or no supply: reasons to get long. The trend after all, is up. If no channel was drawn in the first place, then we have a great place to get short. This is the ideal situation where you have weakness in the background follow by an up thrust then followed by a no demand. Did I draw the channel too soon?

 

This brings us back to #4. The channel may have indeed been placed correctly. The market simply has chosen to go down. It does seem to respect it though. #4 is a move back towards the channel that is meet with over head supply causing a narrow range up bar , or squat. Markets do not like up bars on high volume especially if the range is narrow. Channel or no channel, get short young man.

 

In my opinion, the channel helps support taking a short at 1,2, and 4. It hurts at 3. In the end, however, the issue is not the channel but about understanding the power of narrow range up bars on high volume (increasing). Simply waiting for no demand can be a bit myopic and hurt our bottom line: the P&L.

[kuky969 10]

Happy Holidays everyone!

 

See you after the New Year,

 

Eiger

Thank Eiger

Happy Chritmas everyone who read and post in this thread .

This thread together with Wyckoff thread are incredibly good source for learning.

Thank man as Eiger,Volume Jedi ,jjthetrader,dbPhoenix and everyone who post for helpfulness and patience.

 

PS: I subscribed VSA club but for just one month and cancel it, because in my opinion this thread is incomparably better for study and getting a new informations.

 

See you in New Year

[kuky969 10]

VolumeJedi

Thank for your very educative posts.

please I would like know your opinion.

I want see before squat some sign of demand entry on 1-2 bars before . For that reason I dont consider numb. 2,4 as squat.

What do you think please

[jjthetrader 10]

hi.

 

page 200 looks like a good point to start to post.

 

i need read the entire VSA thread 1 and this thread too. But i need to post a pattern i saw today in Forex. I see people took 2 trades in Forex today but the best pattern i saw today was in USDCAD. The bar before the top was what i believe a super buying climax and the next bar was a very narrow spread bar. A "doji". I believe this was a ND bar.

 

this is correct? I was introcued in VSA by speres who already posted in this thread. It was 1 year ago but i found the book too much difficult and gave up with it. Then this year after read some advices i decided to try it again. Then i am reading Master The Markets again.

 

i will very gratefull for any comments. And sorry for my horrible English.

 

Welcome. If you would like comments on a chart then please post the chart. Not everyone has forex data or the psychic ability to know which timeframe you're speaking of. I've attached a 20min USDCAD for the day you mentioned. If you would like to make comments on it for what you actually meant then we can help out. Alternatively let us know the timeframe and date and time of the bar you're speaking of and I'll post another chart for you if you wish.

 

VolumeJedi, nice post. I like your 4min chart. Do you live in the UK to be trading those hours or are you a night owl?

For me, even though we moved down off the highs a good deal, the 4th No Demand, which wasn't really a no demand but the bar previous to it along with it are showing no upside demand, would have been my entry. We broke down out of the channel and there was no demand to re-enter it. I like those. Plus in forex I like there to be a move to the downside already take place to give you that downward momentum because of how liquid that stuff is and how it can continue up despite weakness entering. I like it to be well confirmed. Although #3 is pretty awesome. It's a no demand with a trap upmove confirming it. It doesn't get much clearer than that. Nice work.

 

CandleWhisperer, Thanks for all the thanks. We miss your forex trades and posts. It would be good to see what you're doing these days.

Edited December 24, 2008 by jjthetrader

[jjthetrader 10]

I didn't know if there would be trading today but I guess FX doesn't sleep. I took two trades on cable this morning. I was inspired by VOlumeJedi's 4min chart and thought I'd try it out. As Borat would say "Very Nice"!

 

Bar A: Wide Spread Upbar with ultra high Volume and the Next bar down equals weakness, for the time being.

 

Bar B: This is a Test but in order to complete the pattern we need the next bar to be up.

 

Bar C: This does not end up confirming our test but rather confirms it's failure. This is also a trap up move which comes down to close lower than the previous few bars. A failed test is our second sign of weakness. I short it there on a small retrace.

 

I now have to sit through a little bounce but I'm not worried with weakness in the background. They have to do this to shake people out. I covered on the close up the upbar at the bottom marked Cover 1.

 

Bar D: This is actually over two bars. It's a shakeout pattern and happened right on the open of the NY session. They mark it down only to rally off of it. And notice all the while we're making higher lows. It appears we're in a short term uptrend.

 

Bar E: We get Ultra High Volume on a level bar and price did not go up on that as we approached a trendline.

 

Bar F: This completes our 'effort without result' pattern. Lots of effort on the previous bar but no result.

 

Bar G: This is our potential no demand right on the trendline with the next bar down confirming it. I short the retrace of the confirming bar.

 

I ended up covering that second position after a wide spread down closing in the middle appeared. I don't want to mess with this bar.

[VolumeJedi 10]

..VolumeJedi, nice post. I like your 4min chart. Do you live in the UK to be trading those hours or are you a night owl?

For me, even though we moved down off the highs a good deal, the 4th No Demand, which wasn't really a no demand but the bar previous to it along with it are showing no upside demand, would have been my entry. We broke down out of the channel and there was no demand to re-enter it. I like those. Plus in forex I like there to be a move to the downside already take place to give you that downward momentum because of how liquid that stuff is and how it can continue up despite weakness entering. I like it to be well confirmed. Although #3 is pretty awesome. It's a no demand with a trap upmove confirming it. It doesn't get much clearer than that. Nice work...

 

JJ, I just started using the 4 minute and I am finding it pretty nice. Putting all the esoteric numerology theories aside, it's just a good mix of the 5 and 3 minute charts.

 

As for #3 on the previous chart.

 

The entire post had two themes:

 

1. Looking for up bars on volume less than the previous two bars (no demand) is good way to look for entries. However, up bars on narrow ranges with increasing volume, squats/some up thrusts, also make good entries. And we sometimes focus our attention on the former rather than the latter to our own detriment.

 

2. Once you draw a channel, correctly or incorrectly, there are certain constraints placed on entries based on the understanding of what a channel means.

 

If I had not drawn that channel, #3 is my ideal entry. I would have gone short on the close of that no demand bar. There is enough weakness in the background and the bar is a NR4. (In fact, I was looking for point 2 to be no demand but the volume increased making it a squat. And as point 1 tries to make, a good entry if we are not simply focused on volume less than the previous two bars.)

 

However, I had drawn the channel and now the appearance of the no demand must be taken within the context of the channel. We are at the demand line. We have just seen some support come in on the previous bar. This bar means a bit more with the channel drawn than without it. Since it shows prices not yet willing to close below the channel. Then we see the trap up move bar. Very nice pick up JJ. This bar closes below the channel. Another good sign of weakness. But here is the thing:

 

We do not want to go short on a down bar. Therefore, we would start looking for an up bar on low volume (no demand). The market does not give us that, but it does give us #4. A narrow range up bar on increasing volume. This is a squat and a good place to short. If one is too focused on no demands, this entry might get missed.

[giraia_br 10]

hi jjthetrader

 

 

sorry for not post the image. Looks like your image is the correct point. It was the previous top, yesterday (23/12) 1 hour time frame. 08:00 GMT bar.

 

and i need to say that talking in private with another VSA expert (from another forum) i am even more confuse. So, please help me. :crap:

 

thanks for reply.

[jjthetrader 10]

We do not want to go short on a down bar. Therefore, we would start looking for an up bar on low volume (no demand). The market does not give us that, but it does give us #4. A narrow range up bar on increasing volume. This is a squat and a good place to short. If one is too focused on no demands, this entry might get missed.

 

Very good points. We run into a catch 22 with needing a confirming downbar and wanting to short on an upbar. I don't mind taking the break low of the no demand bar. At least on a downbar you have a bit of momentum on your side.

 

I agree that we shouldn't be too focused on only certian kinds of bars. Like in my cable trade I posted, I was focusing on the failure of a pattern being a good entry as well.

 

Yes the 4min is a good mix of the 3 & 5min. This stuff happens on all timeframes.