Pure VSA

[GLE% 10]

Will do Eiger - tx - I appreciate your reply.

 

Having seen your channel drawn, I had a :crap: moment. Pretty obvious.

 

In light of the post you mentioned at first, with the UT (I also saw it on the 5min chart this morning), I have offered this chart - looking back to why there might be a sign of reversal this morning. Only 5 ways to stop a rally.

 

1) Buying climax - not present

2) A Failed Test - not present

3) Narrow spreads accompanied by high volume - not present

4) The up thrust - tada!

5) 2 Bar Reversal - with the 2nd bar closing below the low of the 1st high volume bar, on a wide spread. (not present)

 

 

Upthrust, coming into resistance was the clear winner.

[kuky969 10]

Hi Eiger

During today market I exactly watched at HUT that you have in your picture and I contemplate ........it is HUT or NOT. ???

I have always problem with HUT. I thought that it must close below small resistance -- I draw green line in your picture . So it seems is not truth. ??? . Please where is truth ??

P.

[Eiger 10]

The key trend lines are drawn in green on the attached chart. These contributed to the structure or background conditions. You need to go back for more data to see the longer-term supply line. A 60-minute chart shows this structure well.

 

There were more indications than the UpThrust. Yesterday afternoon had a probable Buying Climax. The reaction from yesterday's high was on increased volume, indicating supply. The rally from yesterday afternoon lows was not particularly vigorous and we didn't make new highs in the overnight. These are detailed on the chart posted earlier and contribute to the overall background. The UT was the aggressive trigger, and the No Demand following the UT was the final confirmation and safer trigger.

 

A 'story' was able to be told with all of the pieces from the structure of the market to the probable BC. Try to build a story for every trade. Avoid reliance on one or two bars. When you have a story, you have taken into account background & structure, key trend lines, S/R, characters of the rallies and reactions, etc. Once these are in place, you then look for VSA indications, not before.

 

Eiger

[Eiger 10]

...During today market I exactly watched at HUT that you have in your picture and I contemplate ........it is HUT or NOT. ???

I have always problem with HUT. I thought that it must close below small resistance -- I draw green line in your picture . So it seems is not truth. ??? . Please where is truth ??

P.

 

The Truth!! That is a tall order From the pure VSA perspective, you are correct - it doesn't quite meet the criteria. I was thinking more of the lack of ability to rally above the resistance line I drew, then closing below it. Sometimes it is hard to keep things 'pure.' Sorry to confuse you. The next bar closed under your resistance line. Check the 10-min chart, which does show the HUT nicely. It is a good idea to keep a higher time frame chart or two on your screen. Not everything sets up on the 3 or 5-minute charts.

[Eiger 10]

For Tomorrow:

 

No one that I know can predict the market consistently. This is especially true for me. What I find more useful is anticipating different market actions. When we see a scenario unfold that we anticipated like we did today, it is much easier to pull the trigger and go with a trade.

 

As I look at the structure of the market, I see a potential Buying Climax (red arrows) and selling over yesterday and this AM at a confluence of resistance: intermediate Supply Line (red), Large Support area now turned Resistance (purple), and the Supply Lne of the 60-min Day Session UpTrend Channel (light blue).

 

Despite all this bearish resistance, we cannot fail to take into account that the market has had a normal reaction to the current Demand Line (light blue). We cannot discount the possibility that this market may rally further.

 

So, two basic scenarios play out: a reaction (in red) and a rally (green). A third (not shown), is sideways movement.

 

For the reaction to take place, price would have to break down through the support area located by the black horizontal line. It may make a higher low in doing this (shown), or another UpThrust (also shown with a dashed line).

 

It may also rally. perhaps coming down to the support level (black line) on light volume and then rallying above the resistance of both the intermediate term Supply Line (red) and the two day highs. Should it do this, we would look for a test to occur after the rally by backing up to or close to the intermediate Supply Line (now support).

 

The other main possibility (not shown) is that the market goes sideways, holding it's gains in a resting pattern -- niether making new highs nor reacting very much. This would be bullish were this to occur.

 

Anticipation rather than prediction is the name of the game. Lay out the probable scenarios and then trade accordingly. Let's see what happens

 

Eiger

[kuky969 10]

Eiger

thank you , I dont use 10 min chart but very often I simply duplicate 2 bars (5 min) together in my mind . I get used for it and it is very good for me.

[GLE% 10]

Hi Eiger,

 

Thanks for your reply – I have made notes, and have utilised that as my daily order of tasks in the market

 

A few notes:

 

1)My chart was a 60min chart

2)My horizontal resistance line was the same as yours

3)The supply line that comes from the previous highs unfortunately doesnt look like yours (attached). Because of the new contract, my Transact feed into Ensign shows only the new contract data (even when I use the continous contract info). Hence, I didnt use that trendline – its a bit messy and doesnt correlate as well as the others.

 

Something I did before coming here and seeing your post:

 

1.When I redrew the channel, I noticed that the top trendline was more in keeping with the highs – see attached. I can see where they intersect - big reaction there.

2.When it closed down out of the channel, and traded below the low of that down bar, it was pretty evident that it was going to turn bearish short term.

 

Thank you for your words, and time!

 

GLE%

[GLE% 10]

Hi Everyone,

 

Thought it would be a good thing to put Eigers (and others) excellent contributions to practice – as well as start a VSA analysis for the ES – before the next days trading begins (day session).

 

I have attached a 240min all sessions look at the ES – M contract.

 

The anticipation is for the market to go down – but it has found support at a minor swing low. So therefore, we look for VSA signs that it will either bounce from here, or continue the selloff.

 

The following would be key things to look out for:

 

1)A test to guage if there is selling interest – and for that test to be successful, we need it to occur on low volume. If it is successful, then we will see an immediate rise in the market, from the BB. If that test is on high volume, then we anticipate that that area will be tested again.

 

If the response to this upmove is sluggish, or fails to respond at all, we can clearly take that to be a sign of weakness. A low volume rally would be a further sign of weakness.

 

2)No supply, absorption volume, stopping volume, and a shakeout, would all be signs of strength, and for the bull move to continue.

 

 

I am pretty certain that more competent VSA'ers will be able to fine tune - and add to my analysis.

 

Happy Weekend!

Edited March 21, 2009 by GLE%

[anirudhsworld 10]

hi can neone tell me wat d shart which i am posting suggest according to vsa..i thought it was smart money exchanging hands but i gues i was rong...

[anirudhsworld 10]

on more chart i see it's HNS in formation(prsently right shoulder) and volume patterns and narrow spread on right shoulder says downtrend is imminent.need advice frm experts,,thanx

[anirudhsworld 10]

on more chart i see it's HNS in formation(prsently right shoulder) and volume patterns and narrow spread on right shoulder says downtrend is imminent.need advice frm experts,,thanx

[Eiger 10]

Anirudhworld,

 

H&Ss are not a part of VSA, nor are other chart patterns (flags, pennants, etc). VSA is about applying the tell-tale signs of supply and demand within the background context of the chart in your trading. Rather than post VSA-irrelevant charts, you are encouraged to read about VSA so you understand the basic ideas behind it. If you are then interested in learning VSA, you will find this forum to have a wealth of information and the traders here quite willing to help you out. A good place to start is here

 

http://www.traderslaboratory.com/forums/f151/vsa-ebook-master-the-markets-3041.html

 

This is a free download of the Master The Markets book, which explains the basics of VSA. Use the last link in the thread, as this is the current link for the ebook.

 

Eiger

[GLE% 10]

A quick look at todays ES 15min -

 

a) note that the globex session made new highs over friday - bullish hint. Also broke out of bearish channel with ease - another bullish hint.

b) it found support nicely at 779 odd - made a 2bar reversal at 9:14am on a 2min chart - right in the area of the 9:08am WRB (wide range bar). On the 3min, at 951am there was a ND into this WRB and 954am a test into the same.

c) at 10:03am, a heavy push through supply on heavy volume - and at 10:18am, another strong push up through supply, on heavy volume.

 

 

Extraordinary day of bullishness - my chart was done just before 4pm, and I see its pushed even higher.

[MANTRA 10]

Hi All....my observation from today session from 1 to 3 pm mini NQ

 

60 min chart...UP trend

point1 - lower low, but market refused to go down and accepted this SR level - strenght

point2 - higher high, market accepted this SR level again - strenght

 

I was looking for long set up on 5 min chart

 

5 min chart - no selling presure on SR level

up thrust - this was the reason why I did not take this trade

test - very nice test acompanied with low volume

 

I must admit that Eiger told true - Up thrust does not work in UP trend and Test does not work in downtrend

[Eiger 10]

... I must admit that Eiger told true - Up thrust does not work in UP trend and Test does not work in downtrend

 

 

I think you will remember that one after today

 

You had all the indications of strength on your charts:

 

• Market had pushed above yesterday's high and had retested
  
• Market was rotating around a line at A-B-C and pushed above it
  
• Higher high & higher lows on the 60-min
  
• When at the lows below C, no supply was drawn out (big clue)
  

 

There was a nice 'story' in this segment of the market that you could piece together called bullish.

 

That "UT" was just absorbing the remaining supply from the last wave down. If supply had regained control there (highly unlikely with all the bullishness you identified), the next bar would have been down. It dipped lower and sprang back up to close on it's highs (Hidden Test) and a lovely place to go long.

 

Side note: UT should be upthrusting a clearly defined resistance area (old top). The bar you labled an UT doesn't really qualify as an UT - it is just a bar with some supply on it.

 

You identified everything, Mantra. Really nice job! - The next step is to piece it together and see it as a whole - this is your background.

 

Hope this is helpful,

 

Eiger

[kuky969 10]

Eiger

please one question: what is hidden test ???? My answear is below .Am I right ???

.... hidden test just means that it was an test on a smaller time frame making it a bit difficult to see on the trading time frame....

Thank you

[GLE% 10]

Heres something on the 5min ES that I saw after the fact, wanted to share it.

 

Sometimes the market sings a beautiful song.

[Eiger 10]

.... hidden test just means that it was an test on a smaller time frame making it a bit difficult to see on the trading time frame....

 

That's the correct definition. I think of them like a Key Reversal bar. They dip under the previos low(s) come back up and then close on or near their highs, usually well into if not above the previous bar. Keep in mind that they require strength in the background, otherwise they are ignored.

[Eiger 10]

Heres something on the 5min ES that I saw after the fact, wanted to share it.

 

Sometimes the market sings a beautiful song.

 

Jumping a Creek VSA style. See attached chart.

[GLE% 10]

Thanks Eiger. However, there's one mistake on your annotations which I'd like to point out - its one which I also made.

 

The ND was actually a NoSupply. Therefore, its a further signal of strength and definately something to take heed of - in light of the background.

[humdesggg 10]

Hi Eigeer

 

I have been planning to do comprehensive VSA for the 3min chart. Please have a look at it and lemme know where I can improve. This is my 4th week on VSA, and I am still to watch a couple of real good videos to improve on the VSA work.

 

1. Stopping volume. Smart money absorbing sell orders from the sheep. Close in the middle is bullish.

2. The bars before and after 2 shows narrow spread on reduced volume. This foretells higher prices. The buying on high has stopped the down move. This is an up bar closing the middle on volume less than 2 previous bars.

3. Longs from 1 or 2 needs to be protected with tighter stops on this bar, as it shows no demand. This is a test too. A bit scary since a close in the middle or high would have reassured the uptrend. The next down bar is bullish, closing on the high on high volume.

4. Breakout on ultrahigh volume, with close in upper range. Markets despised high volume, as supply creeps in.

5. Stop run on above average volume, closing in the middle. Close in the middle is clearly mo bullish than the previous 2 bars that close on lower range.

6. Testing on no demand. Volume less than 2 previous bars. This would be a low risk long entry.

7. The previous bar made a higher high, on volume much lower than the volume at 4. Combined with the previous bar, this is 2 bar top reversal, on volume that is less than the volume of previous 2 bars.

8. Above-high volume on a up bar. This is normally bearish, but here it reverse the downtrend, and lead to higher prices. Volume is same level as no 5 and leads to higher prices.

9. This is test on no demand, a safe low risk entry for a long.

10. New high on above average volume, closing in upper still fairly weak

11. All session high volume prints, showing that there was buying in this bar closes higher

12. Stopping volume, as next bar is up, though closing on low.

13. Test on volume less than 2 previous bars, no demand.

[humdesggg 10]

I accidentally deleted the chart!!

 

here it is.

[2trade 10]

The Truth!! That is a tall order From the pure VSA perspective, you are correct - it doesn't quite meet the criteria. I was thinking more of the lack of ability to rally above the resistance line I drew, then closing below it. Sometimes it is hard to keep things 'pure.' Sorry to confuse you. The next bar closed under your resistance line. Check the 10-min chart, which does show the HUT nicely. It is a good idea to keep a higher time frame chart or two on your screen. Not everything sets up on the 3 or 5-minute charts.

Hi Eiger where and from whom are you getting your VSA knowledge ? Thanks 2trade

[Eiger 10]

... Please have a look at it and lemme know where I can improve. This is my 4th week on VSA...

 

You are off to a good start. Four weeks isn't much time, so you can expect more work and effort ahead.

 

A few things you can do that might be helpful. First, understand the difference between Tests and No Demands. Tests disconfirm the presence of supply; No Demand disconfirms the presence of demand. You seem to have them confused. Tests do not show no demand; they indicate a lack of supply.

 

Try hard to see the bigger picture. The bar at 4 was less a 'break-out' than it was the presence of supply. This became evident at 7, and especially at 10 and the next bar when supply finally overcame demand and took the market down. Understanding the background will keep you from making poor trade selection as in 9. Staying too focused on the bars leaves you missing the forest for the trees and encourages trading random patterns. Strive to understand the background.

 

Eiger

[Eiger 10]

Hi Eiger where and from whom are you getting your VSA knowledge ? Thanks 2trade

 

Different places and different traders. Some of it I make up for myself.