[VSA] Volume Spread Analysis Part II

[mister ed 10]

Well done Sledge - thats a great help to all.

 

I had a few charts I had saved to take notes on too, these I have already forwarded to James to integrate back into the original thread if it cannot be restored, so I think with the great community effort a lot of these charts will be back on the site freely available again.

[habi 10]

Check out attached chart. In this new (and improved?) second thread on VSA, I'd like to advocate that we spend a little time each weekend and analyze the major charts for the following week---maybe give us all a heads up. Here's my lame contribution for this week--looks like we have a successful test (low volume down bar, attempting but failing to go down to area of previous supply). This would suggest that maybe the January lows will hold and we'll get an up-week next week. Anybody care to shoot me down? Please feel free.

 

Tasuki

 

Yes, I had the same idea, that we see now a downmove on lower volume, but I'm not shur, if the low is already in. A look at a 60 minute chart give me different signals:

 

On thursday, we had first to up candles, the second with the highest volume for the last two days, but with long upper shadows, a sign of weakness. After a doji, we see two up bars, closing near the high. The first one with low volume, the second one with some more volume, but followed with a down cnadle with very high volume, forming a WRB. In the next bar we see some strenght came in and on friday another test bar.

 

Since I see signs of weekness and strengt it's hard to say in which direction the next move will go. Maybe it's better to wait for further signs above or below this consolidation.

[Sledge 13]

Well done Sledge - thats a great help to all.

 

I had a few charts I had saved to take notes on too, these I have already forwarded to James to integrate back into the original thread if it cannot be restored, so I think with the great community effort a lot of these charts will be back on the site freely available again.

 

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.

Edited February 11, 2008 by Sledge

[habi 10]

YOU AR NOT ME. USE YOUR OWN CHARTS AND OWN EXAMPLES. IF I CAN I WILL BE DELETING THE TEXTS AS WELL.

 

 

Let's look forward. PP made a great work in this forum. It's a pity that he deleted all the charts and nobody knows the reasaon, it seems to be a big probelm. But I think, we should respect, that he don't like to see his charts in this forum. I hope, that the forum responsibles find a way, that he comes back to this forum.

[MrPaul 10]

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.

 

Go ahead and do whatever you like Sledge. Your efforts are appreciated. The individual once known as PivotProfiler needs to realize that when you post on a public forum, you make it public business!

 

I find it interesting that the individual known as KPCurrency on another forum which I believe is the same person as PivotProfiler has not deleted any charts from that forum. Maybe he was not able to?

[mister ed 10]

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.

 

Hi Sledge

Well I think MrPaul has said it - once its on a public forum for all practical purposes its public.

 

I don't know what PP is going through, and although I am p*ssed off with what he has done I am going to give him the benefit of the doubt and remember the good stuff he gave while he was here.

 

Again, on a practical note, if his plan is to delete the text as well (if he can), then let's get cracking on saving those!

[MC 10]

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.

 

WOW. Something must have happened here. Nobody got wind of his reasoning?

 

If he is in fact KPCurrency, which with the same sig line I would have to say it is. Can't the charts that went missing be found there and brought back if people so desire.

 

Now as good as his charts and contributions were, we have the talent to make up for what we lost. I say maybe we should respect his wishes though I'd love to here why he did this to IMO the best trading community on the web.:\

[Soultrader 12]

Interesting chart on ES today. First sign of weakness is shown by the transparent circle on volume increase. Then rallies slightly to hit resistance at a key resistance level from 2/5 high.

 

 

[MrPaul 10]

Here is my take on today’s action for the Russell 2000 futures:

 

I have included a screen shot of my daily journal to give you an idea of what I’m thinking before I start trading. The journal is created the night before and the parts I add after that are the pre-market notes, and the Wrap up of the day.

 

Orange arrow- After a few tests down the market is able to rise with some conviction. Notice that the third candle of the day forms a doji like candle and the candle after that prints higher. That is an important indication on momentum shift. A long placed here has fair placement but higher than average risk.

 

Yellow arrow- The market pushes up to meet supply and long liquidation here but the market still remains technically bullish until the lows of the 7th candle in are broken and closed below. Taking half of your position off could be a wise decision here as there are no certainties only probabilities at the right edge of the chart.

 

Blue arrow- the market tightens and forms a doji on lower than average volume. The volume is slightly higher than the previous candle but that is favorable for a long bias because the spread is higher! Once again the market closes above a doji signifying momentum to the upside is still present. Close only stops are ideal below this newly formed structure.

 

Green arrow- After drifting downward from finding no fresh demand that market once again finds volume near the previous days high. Volume increases, spreads lift, and an engulfing pattern is made near 50% of the prior move. This is Ideal for a long trade.

 

Pink arrows- The market offers two very short, very shallow opportunities to add to your position and/or move your stop orders just below them. Look at the volume, there is no supply being found by the market!

 

White arrow- Lastly, after a 50-60% pullback the market finds demand that prints as higher than average volume with higher spreads (closing off the lows).

 

I wasn’t present for the market action during lunch (the slow move lower between 10:15am and 11:00am CST) or the last move of the day, so I cannot comment on the moves after that. Hopefully this helps somebody out…

 

 

[speres 10]

Hello people, my first post here. Been practising VSA for quite a while now. I actually trade supp, res, this does help....... heres my take on yesterdays and current GBP/gpy action vsa only.

 

A reversal

B wide spread up with a bit of a top tail, high volume, weakness coming in. followed by another high vol wide spread up. Pros using this distribute.

C hidden upthrust. You really don't want to be long now.

D no demand. followed by down bar confirmation

E price attempts a rally but is pushed down

 

more downside to come probably.

jpy 1hr.bmp

Edited February 13, 2008 by speres

[habi 10]

Interesting chart on ES today.

 

Yes it is. Let's have a look at a 5 min char and focus on the high volume bars. At point 1, we had a up bar with ultra high volume followed by a shooting star with even higher volume, a clear sign of weakness. I often observed, that prices goes above the first sign of weakness, but then gives you a good short entry.

 

Contrary at point 2. We had a long down bar on ultra high volume, closing on its low, followed by an up bar with about the same volume and a long lower shadow. A trade below this bar with the additional gap support was a good long opportunity.

[mister ed 10]

Hi all, this thread is going really well - thank to everyone posting it is really helpful and interesting.

 

I have posted a bit of an analysis in another thread that could be of interest to Wyckoff and VSA users.

 

It is reproduced here for interest, hope you dont mind. In this re-post I have corrected one typo, otherwise it is unchanged.

 

----------------

OK - here is my take on STX as of now. Usual caveats apply. Be interested to hear of others' take on things.

 

Chart 1, the 1 point by 3 box reversal shows a big spike down to the August 07 lows, and a reaction from there to where it closed today. So once again there was demand around the $19 level (downto $18.50). This spike down could well be what Wyckoff analysts will refer to as Preliminary Support.

 

Chart 2, a 1 point by 1 box reversal shows me some signs of accumulation beginning - after the preliminary support and 3 point rise we have a small dip (test) and then continued buying (response). Strength. As of now, though, this move from the preliminary supply spike down is not enough to take it on an extended move higher, there will need to be more accumulation before a significant rally can develop. Thus expect sideways (to aid the process of accumulation) from here, not straight up.

 

Chart 3 is the daily OHLC/candle. It shows some VSA warnings. Zoom in to chart 4 to make these clearer.

 

I will point out some significant points to me - they are in the past so are of limited value now, but these are the things I do watch for.

The move down in mid Jan on huge volume - reversed by a Marubozu day on the 22nd followed by a bullish hammer the next day (I should clarify, the names of the candles are not the important things, rather the price moves that they represent are what are important to me. And, especially on daily charts, the closing price is of a lot more significance than the opening price)). Both on good size volumes, obviously demand is re-entering the market. Supply showed itself on the 31st - narrow range with jump in volume, but demand was also present that day, there is strength here as indicated by the hammer on the 4th.

 

The rally since then has been on reasonable volumes, although declining. The price is now re-entering an area of previous congestion (early Jan, $22 to $24). The price action for the 11th shows another test lower (the lower shadow of the candle) with a strong close, but volume is still declining.

 

For me, the rally from the preliminary support low has about run its course for now, there could well be another point in it, but the probabilities say to me that demand is slowing - any move up above the highs of the 11th are a good opportunity to take profits on longs.

 

Keep in mind that price volume analysis is like a movie, you have to keep watching as things change, but on what is presented as of now thats my view.

 

One more thing - it is very interesting with news of the buy back being talked about. If you are of the view that news is used as a tool of manipulation much of the time (I am) then this news is a warning bell that someone wants you to be buying here.

 

ps - I dont have a feed for US stocks, so I am very impressed by Stockcharts!

----------------------------------

[jjthetrader 10]

I agree with Mister Ed, the new VSA thread is going very well. Thanks to all. It feels like some of the old has been cleared away to allow others a chance to contribute and I must say I find you guys, real traders, much more helpful in reading VSA then the hindsight analysis/methodology that we were getting used to.

 

Mister Ed, loved the Point and Figure aspect. Would love to see more of that in the future. I'm just starting to incorporate that now.

 

SoulTrader, loved the MP addition. Can you elaborate on what signaled you on the 'key support from 2/5' in your MP chart?

 

Thanks to all contributing.

[Soultrader 12]

Attached is a .pdf copy of the Ney report. Please read it if you haven't yet. Thanks

NeyReport.pdf

[Soultrader 12]

Interesting chart here on ES using price, volume, and mp levels. First sign of weakness shown by the first transparent sphere. The second weakness was screaming for a short.

 

[Sledge 13]

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.

[Sledge 13]

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.

[Sledge 13]

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

Right Chart, wrong Text

[Soultrader 12]

Please see todays ES video. Thanks

[jjthetrader 10]

James, nice work bro! Posting a video is way better than pictures. Thank you.

 

Having said that I'm going to post a pic:-)

 

My friend Tawe Trader and I were talking this morning about shorting after the second wave of heavy volume (potential selling) to be on the safer side of probabilities.

In my example though we have high volume on a breakout but it's tested very shortly and would have been an ideal place to get long.

 

Then on our second wave of high volume we get an upthrust and it's low being broken would have been a nice short side entry.

 

This is similar to SoulTraders short on the ES.

[habi 10]

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.

 

VSA teaches, that some selling could be in wide spread bars with ultra high volume. As you say, it's important, where the WRB occur in the trend. So it would be interesting, what we have on the left sied of the first WRB. In addition, we should make a different between a WRB, which includes just the range between open and close and a wide spread bar, which is measured from low to high. A bar closing on its high as a single bar is not bearish, even if some hidden selling could be within them. But it means, that the sellers was not able, to push down prices.

 

In your chart, the first WRB is a bullish candle as long as we don't have a close below it.

 

In my opinion, the most important bars are those, with high volume. Then we have to find out, what this high volume means. In your example, we have a WRB on very high volume, closing on its high and higher than the three previous bars. Three bars after your long sign, we see a shooting star with high volume an a long upper shadow. This is a sign of weakness. Even if a second WRB is forming, we have weaknes above the shooting star. After the no demand bar, I see already a WRB down and a possible short against it.

 

The next WRB down has ultra high volume, but closed not on the low which means, that some strenght came in. Since we are on the support from the first WRB, why not a long trade against the no supply bar?

[habi 10]

Some WRB's and how they worked as support/resistance in the ES 3 min chart. but it was not always easy to find a setup within the WRB zone. Today, strenght came in on down bars before closing the up gap.

The higher volume spike in the middle lead to some more points down in an uptrend.

The last two very high bars where probably created by closing day trade positions. We have to be careful, because we have some weakness in the 15 min chart.

[Tasuki 10]

Attached is a .pdf copy of the Ney report. Please read it if you haven't yet. Thanks

 

Great report, very prescient indeed.

 

Ney is dead, isn't he?

[mister ed 10]

Great report, very prescient indeed.

 

Ney is dead, isn't he?

 

Hi Taz - yes he is.

 

I have found some info about him on the net, cut and pasted, and credited to source, into this document (attached). Very interesting.

Richard Ney.pdf

[speres 10]

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.

 

 

good post Sledge may I also add that where you see a wide spread bar in a chart or price level is extremely important also . For example a wide spread up bar through a previous area of supply or resistance requires effort and intent from the pro's.