[VSA] Volume Spread Analysis Part II

[bbj_anchor 10]

 

well, I'll need a lot more study but I was kinda looking for some help seeing if there was a correlation with my "finds" and VSA (and subsequently P&F). I am getting strong correlation for sure but still would like to get a couple of more experienced opinions early on if possible. Thus far my wins with Options are lines 4,7,11,14,19,21 and my loss is line 15. Have a look at what would have been made!

 

Now in addition to looking at what I dont see in my loser I would like to know if there is a really strong indicator of weakness in BBJ_4. This will be another loser unless there is. I'm just asking for one last confirmation of what I cant see...YET! does BBJ_4 show weakness just prior/on/after 20050103?

 

Thanks so much this is amazing stuff!

 

BillyBob

[Eiger 10]

Anticipating a drop

 

I saw this over the weekend, but was too busy to post it.

 

The SPYs have come off the lows by 25% surprising just about every market commentator. Note that on Friday, SPY hit significant resistance just below the 880 level. A few posts earlier, I mentioned that the ES had come into its conservative point & fiugure projection. So, resistance on a couple of fronts.

 

You can also see in the SPY that the range narrowed on Friday and the close was off the highs. The supply line that formed (the top trend channel line) indicates a shortening of the thrust - price was struggling to sustain the hefty rally. Volume also lessened the higher we went further indicating that demand was tiring at the higher levels. On Thursday, there was a spike in volume without much result in price, suggesting a possible minor climax. Friday saw less volume as price tried to rally.

 

The banks stocks led this rally after helping to depress prices for so long. Take a look at the XLF chart, which is the financial sector SPYDRs that has a heavy weighting of bank stocks. Although there is no clear resistance area like the SPYs, you can see that the financial sector was having difficulty rallying up into its supply line, indicating supply, or at least a lack of demand, was occuring early in this leg of the rally. On Friday, price was unable to close on a new high. Instead, it gave us an UpThrust, showing an inability to rally and hold gains above the high set on Monday.

 

Between the SPY and XLF (and the other sectors, too) there were lots of good indications that the market would begin a reaction soon.

 

 

Hope this is helpful,

 

Eiger

[bbj_anchor 10]

  bbj_anchor said:

Wow, this is cool!

Would someone have a look and let me know if much else between the 22nd and the 8th sept, please.

 

again

 

BBJ_1 seems Sept1st is a strong test for supply with large volumes preceding would indicate low supply. thus making downthust following very strong???

 

Am I right?

 

Thanks, BBJ

[bbj_anchor 10]

Eiger, I read your posts and have learned a lot in last 4 days. My question is... why the thread is primarily focused on VSA and indexes, forex etc? Seems and please correct me, that the smart money would really have a slim chance of individually moving them or even collectively moving them due to the # of companies in an index or huge volumes involved in forex etc. Wouldnt it be much easier with better/same results to act upon a single equity where float volumes are mere millions?

 

The reason I ask as equities has been my focus for last 8500 hrs of study. Am I mis guided somehow?

 

Thanks, BBJ

 

Also on your XLF chart would you expect this move up to end? seems no return for SM on the high volume 5days ago and no interest by SM to play showing no volume at support line? My limited knowledge would "guess" a drop to $9.50 for a retest... then re-evaluate move and SM from there? right???

Edited April 20, 2009 by bbj_anchor

[Eiger 10]

  bbj_anchor said:

.. why the thread is primarily focused on VSA and indexes, forex etc? Seems and please correct me, that the smart money would really have a slim chance of individually moving them or even collectively moving them due to the # of companies in an index or huge volumes involved in forex etc. Wouldnt it be much easier with better/same results to act upon a single equity where float volumes are mere millions?

 

The reason I ask as equities has been my focus for last 8500 hrs of study. Am I mis guided somehow? ...

 

Also on your XLF chart would you expect this move up to end? seems no return for SM on the high volume 5days ago and no interest by SM to play showing no volume at support line? My limited knowledge would "guess" a drop to $9.50 for a retest... then re-evaluate move and SM from there? right???

 

Professional traders certainly operate extensively in the indicies through futures, options and ETFs. Volume & spreads can be read well in these vehicles. You needn't limit your trading to equities.

 

XLF did indicate the uptrend was primed for a reaction with the UT and supported by the other indications, including the lack of result by the high volume day. I don't know where the bottom of the reaction will be and I doubt anyone does. It never pays to predict. The task now is to observe the character of this reaction to see whether or not this uptrend is likely to continue.

[traverse 10]

  Tasuki said:

You're most welcome, Monsieur Ed. I REALLY wish we had a standard for chart-posting on this forum, whereby the poster (the person who is doing the posting) should:

 

 

 

2) vertical lines from the price to the volume. This is especially essential in VSA charts. It helps the viewer see which bar the poster was referring to when they say such and such bar represents no demand, low volume test, a squat, etc. etc. etc. The vertical line is just a courtesy to the viewer.

 

QUOTE]

 

I just joined TL and started reading this thread. This has probably already been dealt with but just in case this is a link to a clean little crosshair tool. Wonderful for viewing someone elses static chart.

 

Mike Lin's Home Page

[Tasuki 10]

Traverse, sweet little program! Thanks very much.

Tasuki

[bbj_anchor 10]

  bbj_anchor said:

Eiger, I read your posts and have learned a lot in last 4 days. Also on your XLF chart would you expect this move up to end? seems no return for SM on the high volume 5days ago and no interest by SM to play showing no volume at support line? My limited knowledge would "guess" a drop to $9.50 for a retest... then re-evaluate move and SM from there? right???

 

Yahoo think I'm getting it... XLF plummeted to just under 9.50 as early part of a downthrust! expect up move shortly.. and next stop... ~$13. (per P&F charts, I learned here also!) will quite likely be another down thrust at end of this accumulation too. Indexes arent something I've really looked at so this is a new endeavour for me but first call was dead on using VSA only with no knowledge of indexes!!!

[CazMoney 10]

Hello,

 

I've recently been studying the relationship between price and volume.

 

I have a couple of questions if I may:

 

1.) What materials are available on the topic of VSA.

2.) Is VSA analysis useful, and does it hold merit in the intraday (1,3,5 minute) time frames.

 

Thanks in advance.

 

Caz

[pip168 10]

Hi,

 

I'm learning VSA, how can we practically read the "the Backround" for intraday Trading ?

 

- Check the Weekly chart, --->Check Bull or Bear Volume ?

 

- Check D1, what to "read"?

 

- Check H1, check NO Demand bar, No supply bar, testing bar(morning star or evening star candle), uptrust/ reverse uptrust

 

- entry/exit on 15M chart near Trendlines, S/R

 

Pls advice,

 

Thank

 

Cheers,

[drsushi 10]

Hi All,

 

I'm fairly new to VSA. Some of it seem simple while other aspects seem difficult. Somone has been teaching me thier version of VSA and I wanted to post a chart and get the opinions of those that know. Sorry if this is not the place for this chart. I wasn't sure on what thread to post it.

 

The cart is a 3 minute ES chart from 4/29/09. It could be a 5 min or even a 10 minute, but I used this 3 minute because it depicts the characteristics I've been told to look for.

 

1. Price is rising, but closing off the highs.

2. At the peak there is a high volume bar with price closing off the highs

3. There is a narrow spread bar on low volume. This indicates lack of buying power and the professionals desire not to take it higher.

4. the indicator at the bottom is a DMI and a cross occurs and price starts to fall off.

5. Price at around the 880 areas is a current or prior pivot level.

 

Question is: Does this seem like a reasonable interrpretation of Volume and or VSA?

 

Any feedback / comments are welcome.

 

David

[Eiger 10]

  drsushi said:

Hi All,

 

I'm fairly new to VSA. Some of it seem simple while other aspects seem difficult. Somone has been teaching me thier version of VSA and I wanted to post a chart and get the opinions of those that know. Sorry if this is not the place for this chart. I wasn't sure on what thread to post it.

 

The cart is a 3 minute ES chart from 4/29/09. It could be a 5 min or even a 10 minute, but I used this 3 minute because it depicts the characteristics I've been told to look for.

 

1. Price is rising, but closing off the highs.

2. At the peak there is a high volume bar with price closing off the highs

3. There is a narrow spread bar on low volume. This indicates lack of buying power and the professionals desire not to take it higher.

4. the indicator at the bottom is a DMI and a cross occurs and price starts to fall off.

5. Price at around the 880 areas is a current or prior pivot level.

 

Question is: Does this seem like a reasonable interrpretation of Volume and or VSA?

 

Any feedback / comments are welcome.

 

David

 

Hi David,

 

Your interpretation of the high volume bar and the no demand is essentially correct. The high volume was a minor climax seen by the sudden increase in volume. The DMI & pivots are not used in VSA. Good luck with your trading.

[Eiger 10]

A follow up on the point & figure charts I have been posting over the past few weeks:

 

To recap: in early March, after the rally off the lows, the ES indicated a SOS as it rallied and put in a minor Last Point of Support (LPS) allowing for a count along the 720 line of 80 points for a target objective of 800. This count was flagged, was met, and then exceeded (unlabled flag).

 

The rally was strong and a more significant LPS at the 750 level gave us a two-phase count of 110 to 140 points off the 750 line. This provided target objectives of from 860 to 890, which is flagged at A.

 

By the end of March, the S&Ps worked its way higher, both holding the gains off the early March rally and absorbing the residule supply from 800 to 830. In doing so, the market developed a 'Stepping Stone' count along the 780 line of 100 points, or a target objective of 880. This is flagged at B and lies in between the high and low of the target flagged at A. The consistency of the Stepping Stone count with the count off the LPS both confirms the later count and gave a timing indication for the market to break from the trading range and rume its rally. Yesterday, the market achieved that target objective.

 

Bob Evans, the great Wyckoff trader and educator at what is now SMI/Wyckoff, used to say on his tapes that the completion of the P&F count is a place to 'Stop, look, and listen.' And, as we do just that, we see that the ES is now in a potential UpThrust positon off the January and February highs. You can see this in both the P&F chart and the bar chart.

 

Eiger

[Eiger 10]

  pip168 said:

Hi,

 

I'm learning VSA, how can we practically read the "the Backround" for intraday Trading ?

 

- Check the Weekly chart, --->Check Bull or Bear Volume ?

 

- Check D1, what to "read"?

 

- Check H1, check NO Demand bar, No supply bar, testing bar(morning star or evening star candle), uptrust/ reverse uptrust

 

- entry/exit on 15M chart near Trendlines, S/R

 

Pls advice,

 

Thank

 

Cheers,

 

In the Pure VSA thread there is quite some attention to reading the background. which is applicable for all time frames. You should find that very helpful.

[Eiger 10]

  CazMoney said:

Hello,

 

I've recently been studying the relationship between price and volume.

 

I have a couple of questions if I may:

 

1.) What materials are available on the topic of VSA.

2.) Is VSA analysis useful, and does it hold merit in the intraday (1,3,5 minute) time frames.

 

Thanks in advance.

 

Caz

 

There is a good list of available materials listed in the resources thread, including the free Master the Markets book available as a download.

 

With respect to your question about the usefulness of VSA - there are two very large threads and a handfull of smaller threads that show how many contributors use VSA, both on its own and in combination with technical analysis. Most of these posts are about the time frames you ask about with the exception of the 1-minute chart, which is a bit too noisy for VSA and gives many false indications. If you are interested in VSA, review the material and determine whether or not it would be useful for the way you as an individual trade, given your trading style, unique personality, strengths & limitations, etc.

 

Eiger

[kuky969 10]

  Eiger said:

In the Pure VSA thread there is quite some attention to reading the background. which is applicable for all time frames. You should find that very helpful.

 

My personal suggestion, make "book" from all Eigers ,Candlewhispers ,JJthetraders posts and study,read,make notes , study, read ....

[pip168 10]

Thanks for Advice,

 

- VSA backround can be "read" in 5m TF(one time frame) only, sofar we*ve can identified the Market strenghts or Market weakness of "No Demand, Upthrust, testing" or "stoping volume, reverse Upthrust, testing", before we can make further intrepetation.

 

- How about : D1/Weekly Shi Channel-----> to look for VSA Pattern (Accumulation, Mark up, Distribution, Mark down) ?.

 

- Lower TF for Fine tuning "the backround", eg. 15M to look for Bullish Volume(Market strenghts) or Bear Volume(Market weakness) of "the current Price Action" ?

 

Thank in advance

 

Cheers,

 

 

 

  Eiger said:

In the Pure VSA thread there is quite some attention to reading the background. which is applicable for all time frames. You should find that very helpful.

[kuky969 10]

as regards volume in forex.

Esignal has very reliable data feed "GTIS forex" with data from 300+ big banks and financial company that is trading. Check web side. In forexfactory is one trader that trade forex a few years just using VSA and it seems he is very good .I watch his posts just one week and his expectation in market very often are truth.

[Eiger 10]

Regarding the last series of posts:

 

I was looking into resurrecting the "VSA Crock or Not" thread to move this last series of threads started by Mr. Noorx there. However, since the tenor of the posts quickly moved off the topic of the utility of VSA and devolved into less than mature behavior and irrelevancies, I just decided to delete them in their entirety.

 

Eiger

[Eiger 10]

The VSA II thread has had over 2,200 posts and 128,000 visits. It is the most visited thread on the TL Forum. All who contributed to this thread since it began in February 2008 deserve congrats for their willingness to share information, their creativity shown in applying VSA, and for helping others struggling with the often not-so-easy-to-grasp concepts of VSA. This willing attitude combined with solid content has helped make VSA II the most popular thread on TL. For those interested in seeing how to apply VSA in many different market situations, spending time with this and the VSA I thread will pay good dividends in your understanding of how to read markets and, hopefully, your trading.

 

The thread has, however, become quite large, and probably unweildy. So the time has come to move on to VSA III, which you will find here on the VSA forum. I'll shut this down for now, and encourage all interested in VSA to look to the new VSA III thread.

 

Link to VSA III: http://www.traderslaboratory.com/forums/f151/volume-spread-analsysis-part-iii-5915.html

 

Eiger

Edited May 6, 2009 by Eiger