[VSA] Volume Spread Analysis Part II

[winnie 10]

Dear Eiger,

thanks for your time, it is very clear and helpful. Would you tell me what is mean by downthrusts shorten ? How to measure down thrusts ?

 

Thanks

Winnie

[winnie 10]

Dear all,

Is wycoff has any method to determine the trend which could be used in intraday trading ?

Thanks

[winnie 10]

Dear Eiger,

 

You are right, I should have more patient and wait for the top or bottom to forms before entry and let the story begin start. Thanks for your kind help, your chart is really helpful and I study it many times.

 

Just a question : do we need a down close for a test bar in an uptrend ?

 

Winnie

[jjthetrader 10]

Dear Eiger,

 

You are right, I should have more patient and wait for the top or bottom to forms before entry and let the story begin start. Thanks for your kind help, your chart is really helpful and I study it many times.

 

Just a question : do we need a down close for a test bar in an uptrend ?

 

Winnie

 

Hi Winnie, let me see if I can help. Eiger can jump on board if need be. First, in an uptrend you do not need a down close. It may just happen that your timeframe has a close by 1 tick higher but a lower timeframe shows that down close. Tom Williams talk about this and how you need to be flexable.

There are so many different kinds of tests and this one would be called a hidden test.

 

Ok, in the last few posts you were asking about entries etc. I've got a prime example that just happened on the ES.

 

1. We come up to R1 and find supply. That's no big surprise. So at this point we don't know if it's temporary or a reversal. We pull back a couple bars and stll don't have a clear picture yet.

 

2. No demand shows up. Perfect, we are now are beginning to see what's happening. Now we can do two things here. a) place a sell order below it's low or b) wait for confirmation.

 

3. A trap upmove. This is confirmation. If you didn't have your sell order in, no worries, you'll always get a second chance on a retracement.

 

4. Another no demand and a perfect retracement level, the bottom of the first no demand.

 

5. This is NOT no supply. We just had supply confirmed in this market. Ignore. This just happens to show up because of my timeframe.

 

6. Yet another chance to get short and we didn't even need to pick the top! Even since I snapped that screenshot the market dropped another 7 points between the snap and my writing this and that's on the 3rd no demand!

 

If it's true strength or weakness in the background then you'll have lots of chances to get in which gives you lots of opportunity to confirm the supply/demand dynamic.

 

cheers.

[CandleWhisperer 10]

......5. This is NOT no supply. We just had supply confirmed in this market. Ignore. This just happens to show up because of my timeframe.

 

I disagree.

 

Whilst it is true that it is not no supply, it is no selling pressure. That is because of the low volume with the next bar down. It has nothing to do with timeframe. That prior no demand is valid but its on this timeframe. The difference is the close of the next bar is down after the no demand.

 

If that had been a true No supply, the next close would be up and we would then see an immediate test and/or no demand.

 

Timeframes are independent. That is, valid signs can be seen on any individual timeframe.

 

As for tests, you are correct when you say they come in all forms. And some of those will be up closes rather than down closes. Tom says, pay more attention to the ones that close down. He does not say ignore them and blame it on timeframe. Remember, VSA states that professionals are at work on all timeframes. And, they are competing against themselves and others that can read a chart.

 

P.S. AWSOME Post and pic. I am always glad to see you post.

 

PS.S. Here is a test that closes equal to the previous bar but fails. Not because of timeframe but because there is no upside action after it. Moreover, we get a Dark WRB that closes below and engulfs it.

Edited October 28, 2008 by CandleWhisperer

[jjthetrader 10]

I disagree.

 

Whilst it is true that it is not no supply, it is no selling pressure.

 

 

Ok, for 3 min they took a break from pushing. With the trap upmove two bars previous this still means little. With weakness in the background this is just a downbar with low volume. I'd still short it! ;-)

[Eiger 10]

... Would you tell me what is mean by downthrusts shorten ? How to measure down thrusts ?

 

 

Thrusts shorten to the downside (downthrusts shorten) when the price bar lows start to make less downside progress.

 

The first chart is the 3-min ES today. At the area of A, the market was moving with ease to the downside. There was no real shortening of the down thrusts here.

 

At B, little progress was made on the reaction - little downside movement. Downside thrusts shortened.

 

As C, hardly any downside movement.

 

Here is another way to think about it - this time from the up side.

 

On the second chart, is a series of up waves A, B, C, D. Note how the thrusts of the waves shorten in length the higher the market climbs. The graphic on the left hand side is often useful in this regard.

 

So, you can see thrusts shorten to the downside or to the upside. You can also see thrusts shorten on the individual price bars or in the waves as the market approaches a top or a bottom. In either case, the shortening of the thrust indicates an inability to move price farther in the direction of the current trend, suggesting a potential change in direction.

 

 

Hope this is helpful,

 

Eiger

[winnie 10]

Dear all of you,

thanks for all your kind help in answering my questions. I have print all your charts and comments and read a lot of times to study. I have a problem in identify UpThrust. What is the definition of UpThrust ? Do we need the volume be ultra-high ?

Thanks

winnie

[winnie 10]

I have attached a chart with some question in it. Would anyone help me to answer ?

I see many upthrust on the charts and also do not know how to determine the change of trend in this chart ? In TradeGuider, they like to use a trendline channel. Is this a good method ? Eiger teach me to watch the shortage of Thrust is very useful.

 

Thanks for all your kind help

[jjthetrader 10]

Winnie, lets just think about an upthrust logically. Price moves up, hits an area of supply and comes back down to close on it's low. All the ones on your chart appear to be upthrusts but they're not all tradable.

 

If you've got strength in the background, and you're heading up, then all of a sudden you get a thrust, look left. Chances are you're breaking an old top and support and resistance traders had their orders parked there. Yes that is supply but it won't change the trend, it'll pullback a couple bars.

 

Typically we like to see upthrusts after major supply has hit the market. Once the big boys dump their load then you have a perfect spot for an upthrust to be tradeable. This is their one last push to shake everyone out before they move down.

 

Upthrusts in a downtrend are perfect to unless demand has entered. If there's no sign of demand then take the one half way down. Price went up and tested, there's still supply and it closed on it's low.

 

What market are you looking at?

[winnie 10]

Hi jthetrader ,

Thank you for your clear explains and help. I am trading the Hong Kong Stock Index futures.

My problem in using VSA is I always focus on the recent bars. When I see an upthrust, I always wait for short trade and ignore the whole bull trend.

 

:\

[winnie 10]

Also I have problem in identify the trend. I really don't know how to define the trend. How would you define the trend. Am I too stupid ? :doh:

[jjthetrader 10]

Also I have problem in identify the trend. I really don't know how to define the trend. How would you define the trend. Am I too stupid ? :doh:

 

Well, don't tell your subconscious you're stupid too often. You're new, not stupid.

 

Trend is pretty easy actually. Don't get yourself confused with too many timeframes first off all. They'll alll be pointing in different directions and confuse you.

 

First, what timeframe do you like to trade? Personally I trade the 3min. I don't ever look at a chart higher than 30min. I'm not a swing trader so it doesn't really impact my trade. I'm trading off 'mini' supply and demand pockets. A 30 min chart will tell you the story of the bigger picture to if you need it.

 

Just look at the timeframe you like to trade off of. Are the bars forming higher highs and higher lows? When we have a run up are the pullbacks shallower than the advance? If so we're in an uptrend.

If we're in an uptrend then it's good to be able to tell if there's strength in the background. The uptrend will last much longer if there is.

 

Yes you could use a trend channel to tell you the trend but depending on the timeframe you trade, this could really lag.

 

Bottom line, look for bars to form higher highs and higher lows and for each swing low to be higher than the previous. That's the simplest way I think. It's a great subject and I'd like to hear from others as well.

[jjthetrader 10]

My problem in using VSA is I always focus on the recent bars. When I see an upthrust, I always wait for short trade and ignore the whole bull trend.

:\

 

This is very common. It's called counter trend trading and you can scalp it if you're fast but better to stay with the trend.

[thegame.t2 10]

Well, don't tell your subconscious you're stupid too often. You're new, not stupid.

 

Trend is pretty easy actually. Don't get yourself confused with too many timeframes first off all. They'll alll be pointing in different directions and confuse you.

 

First, what timeframe do you like to trade? Personally I trade the 3min. I don't ever look at a chart higher than 30min. I'm not a swing trader so it doesn't really impact my trade. I'm trading off 'mini' supply and demand pockets. A 30 min chart will tell you the story of the bigger picture to if you need it.

 

Just look at the timeframe you like to trade off of. Are the bars forming higher highs and higher lows? When we have a run up are the pullbacks shallower than the advance? If so we're in an uptrend.

If we're in an uptrend then it's good to be able to tell if there's strength in the background. The uptrend will last much longer if there is.

 

Yes you could use a trend channel to tell you the trend but depending on the timeframe you trade, this could really lag.

 

Bottom line, look for bars to form higher highs and higher lows and for each swing low to be higher than the previous. That's the simplest way I think. It's a great subject and I'd like to hear from others as well.

 

 

the easiest question : wht is a trend ????

the answer is the most difficult 1...

when does the trend start, when it ends , when does a new trend start in the opposite directon????

i can bet many many people here dont know it...

i like to hear from experienced people how they do it???

[jjthetrader 10]

the easiest question : wht is a trend ????

the answer is the most difficult 1...

when does the trend start, when it ends , when does a new trend start in the opposite directon????

i can bet many many people here dont know it...

i like to hear from experienced people how they do it???

 

Well I basically answered your question. The only reason I was willing to go into this topic here is because Winnie is trying to learn VSA.

Are you making your inquiry with regards to VSA or just a basic trend question becuase a whole discussion on trend belongs in another topic. If you start one I'd be glad to contribute.

[thegame.t2 10]

Well I basically answered your question. The only reason I was willing to go into this topic here is because Winnie is trying to learn VSA.

Are you making your inquiry with regards to VSA or just a basic trend question becuase a whole discussion on trend belongs in another topic. If you start one I'd be glad to contribute.

 

can u pls tell me in which topic is trend being discussed...i was not enquiring abt vsa

[jjthetrader 10]

can u pls tell me in which topic is trend being discussed...i was not enquiring abt vsa

 

Not sure, you could start a new one though if this is something you're interested in.

[winnie 10]

Dear jjthetrader,

You are very helpful and positive. I need to find a way which suitable to be and your advise is very good .Thanks for your kind help.

 

Winnie

[CandleWhisperer 10]

Here's a couple of charts with some nice VSA action.

 

Let's look at the chart on the left first:

 

A: The Euro is in an obvious up trend (5 min timeframe) since after the fed lowered rates. Price move up to R2 and we see Ultra High Volume on an up candle that closes off its highs. In fact, it closes lower than its midpoint with the next candle down. Before we see the next candle, however, we have to ask, "If all that volume was bullish, why is the close less than the midpoint?" There most of been some selling in that candle. This candle appears where we would like to see supply enter: R2.

 

B: The next candle is down. This candle has volume less than the previous two candles and closes down. This is no supply. But we just had a wave of supply enter. What's going on? Is the market now weak or still strong? Not sure. Neither are the BBs, so they will "test" the waters.

 

C: This is a Test. Note the volume is high on this Test. There is indeed supply underneath. The high volume tells us that the test has failed. The BBs went looking (testing) for supply and found some. When the BBs test, they do not want to find supply, which is why the volume should be low on successful test, not high.

 

D: Large dark WRB that engulfs and closes lower than the Test candle. Weakness confirmed.

 

E: Two candles later, we see a narrow range up candle with volume less than the previous two candles closing on the bottom half of its range-No Demand. The market is weak. Get short young man (maybe?).

 

 

The question is now this: will we revisit R1 or find support at M4? If you're quick enough, you can take a trade down to M4. If the market blows thru M4 on the downside as it did on the upside, then we can look to R1 for support. Resistance becomes support.

 

The second chart shows what happened. M4 did indeed act as support as of the capture.

[kuky969 10]

I am just a novice in VSA ,but I would like ask what do you think about this trade?? I took it ( paper) on the close of B bar in 3 min TF . Is very aggressive ??

Thank

[jjthetrader 10]

I am just a novice in VSA ,but I would like ask what do you think about this trade?? I took it ( paper) on the close of B bar in 3 min TF . Is very aggressive ??

Thank

 

Agressive? lol, of course. We always take more agressive trades when its paper trading. Would you have considered that with real money?

It was a nice double top but that bar closing on it's low, could that just as easily have been support and resistance traders at the double top area?

I would have at least taken the trade (not that I would have taken that one) when the low of B was broken.

[kuky969 10]

JJ

thank

yes most importatn question is if I take this trade in live ???

[jjthetrader 10]

D: Large dark WRB that engulfs and closes lower than the Test candle. Weakness confirmed.

 

E: Two candles later, we see a narrow range up candle with volume less than the previous two candles closing on the bottom half of its range-No Demand. The market is weak. Get short young man (maybe?).

 

Hell ya get short! This is one of my favourite setups.

 

Yes there was potential support down below but in trading we're never looking for the market to continue in one direction forever. There was enough there to have a good risk to reward trade.

 

Nice example.

[sleepy v2 10]

My advice is to find one VSA setup. Learn it, know when it's valid and when it's not, find out how to enter on such a setup and once it's made you rich you can add a second setup. Master just one. That's all you need to make money. They happen all day everday on different timeframes.

 

Great advice JJ ... although I think many will have missed this piece of wisdom.

 

Based on your experiences to date ...

Which setup would you recommend starting with?

... and in order, if possible the others you'd recommend?

 

Was thinking of starting with Upthrusts but would also welcome others opinions.

 

sleepy