[VSA] Volume Spread Analsysis Part III

[sevensa 10]

This is very nice. Thanks for this. This is similar to the Better Volume Indicator by the guy at Emini-watch.com. I like this one better because it seems easier to understand.

 

How did you get the candles to paint the same color as the volume. I have the volume, but no the candles.

 

Thanks again.

 

David

 

I am glad you find it useful. I think in the newer versions of Multicharts, one can have paintbars on candles, but the older version I have, one can't, so I am simulating candles. I am basically plotting a regular bar chart and overlay it with a paintbar painting between the open and the close of the bar and increase the width of the paintbar about twice that of the width of the regular bar, so it looks like a candle.

 

Below is the code. If you change input CandleSim to "False", it plots the whole bar for when you want to use regular bars. If you want to simulate Candles, set the input to "TRUE" and plot it over regular bars.

 

The bars also might not always match the colors on the volume histogram. I only paint no demand/supply when the volume is lower than the last two bars AND the range is lesser or equal then the previous bar. If you don't like that, just remove the "and range <= range[1]" section from the if statements.

 

inputs:	UpColor(Green), 
		DnColor(Red),
		NoDemandColor(DarkGreen),
		NoSupplyColor(DarkRed),
		CandleSim(True);

vars:	color(0),
Vol(0);

If BarType >= 2 then Vol = Volume else Vol = Ticks;

color = White;

if C > O then begin
color = UpColor; 
If Vol < Lowest(Vol,2)[1] and range <= range[1] then color= NoDemandColor;
end	
else if C < O then begin
color = DnColor;
If Vol < Lowest(Vol,2)[1] and range <= range[1] then color = NoSupplyColor;	
end	
else begin
if C = O then color = White;
If Vol < Lowest(Vol,2)[1] then color = Yellow;	
end;	

If CandleSim then plotPB(open,close,"VSA Candle",color) 
else plotPB(High,Low,"VSA Bar",color);

[bbj_anchor 10]

Upthrusts and downthrusts... VSA major signals... they wait for confirmation etc... just go they are powerful! sometimes some sideways but almost never a wrong indicator... use as a confirmation of you plays... NEVER go against it you will get killed! I wrote an excel spredsheet that kinda finds THRUSTS... just using 3 randomly picked stocks the ones that went opposite the thrust was huge considering NOTHING else was used!

[ESTRDR 10]

i'm long es 881.50 on globex lows. see chart for reasons.

any criticism welcome.

 

[HTM 10]

I am new to TS and EL, Sorry....How do you transfer code to TS.

 

I tried using copy to word but it did not maintain the correct code.

 

Sorry for the inexperience ...would appreciate any help ..thank you

Edited May 27, 2009 by HTM
spelling

[Tams 20]

I am new to TS and EL, Sorry....How do you transfer code to TS.

I tried using copy to word but it did not maintain the correct code.

Sorry for the inexperience ...would appreciate any help ..thank you

 

 

if you copy directly from the Code Window, you will lose the text formatting.

 

do it this way:

 

click on the "Quote" button...

 

then copy the code from the quote window.

[HTM 10]

TU Tams,,tried to IM you but was not allowed..

 

can this copy from the quote be directly copied to TS EL somewhere....are you familiar with ATW?

 

TXS

[Tams 20]

TU Tams,,tried to IM you but was not allowed..

can this copy from the quote be directly copied to TS EL somewhere....are you familiar with ATW?

TXS

 

 

not familiar with atw

 

i don't use ts anymore... can't tell you the exact way to import an indicator.

 

i would suggest you to spend 5 min with the user manual.

 

there are lots of free indicator here... can't enjoy them if you don't know how to import them.

[Eiger 10]

Last night, another trader and i were reviewing the background and structure of the ES market on the 60-minute time frame. On the 60-minute, we noted that the market had been trending, but entered a trading range in early May which has now gone on for three weeks (fifteen trading days). Although the low of the range has been tested a few times, we noted an axis line (blue line on the 60-minute chart) at about 895 that the market has been rotating around for the past two weeks. Yesterday, the market closed near this line after trading lower through the afternoon. There were indications that buying was once again coming into the market at this level, and so we were anticipating that the market would trade higher today.

 

After selling off back into yesterday's lows and testing that area, we had several nice VSA indications occur on the 5-minute chart leading to good long trades. Even more were seen on the 3-minute time frame.

 

This is just another example of how understanding the background and structure of the market can help us anticipate how the market may trade tomorrow and the levels at which trades can set up.

 

Right now, we are begining to see a potential apex form on the 60-minute chart, indicating that the 3-week range may be coming to an end in the next day or so. We will look to be guided by this unless, of course, another development becomes clear.

 

Hope this is helpful,

 

Eiger

[Tasuki 10]

Eiger, I know I should know these acronyms, but UT means ? and SOT means ?

 

One thing that VSA doesn't seem to spend much time on is the volume/spread patterns within well-known structures, such as your "apex" (i.e. triangle). Those huge volume spikes near the end of the triangle have to mean something, but I'll be darned if I can figure out whether its bearish or bullish. Symmetrical triangles are usually continuation patterns, and indeed those two big volume spikes occur where price tried to break down and failed, so my best guess is that we're looking for higher prices tomorrow.

 

Any thoughts on this?

[drsushi 10]

Tasuki,

 

I'm pretty sure UT stand for Upthrust. SOT has got me stumped. Sign of....??

 

David

[sevensa 10]

Eiger, I know I should know these acronyms, but UT means ? and SOT means ?

 

UT = UpThrust

SOT = Shortening Of Thrust

[Eiger 10]

...those two big volume spikes occur where price tried to break down and failed, so my best guess is that we're looking for higher prices tomorrow ...

 

I don't know if it will be tomorrow that we leave this trading range, but soon as the swings are getting narrower. That looks like buying to me, as well. Also, looking at the SPY daily chart, you can see that the gains off the early March lows are being held. There is no sign of distribution here, which would indicate higher prices.

 

Eiger

[kuky969 10]

just my view on 1 h. ES ....or question ??

http://www.sierrachart.com/userimages/upload_2/1243581982_98_UploadImage.png

[Tasuki 10]

There is no sign of distribution here, which would indicate higher prices.

Eiger

Just for review, and for the newbies to this thread, would you please show us or tell us what the signs of distribution are, so we'll know them when they finally show up? Many thanks,

Tasuki

[Eiger 10]

... would you please show us or tell us what the signs of distribution are ...

 

Let's make this a group discussion where we can all learn.

 

I have already suggested one indication that this is more likely to be reaccumulation than distribution: we are in a strong uptrend and thus far, this last 15-day trading range has held the gains made from the rally off the March lows (Note, though, that Friday's price action put us into a potential UT position, which takes some of the chips off the bullish side).

 

If others participate, we all have the opportunity to have insights from things we didn't see.

 

Eiger

[kuky969 10]

small surprise from market:)

Friday I started trading in afternoon ,and market was in chop ,very poor volume ,level 903 was peak of volume from thursday(for me support) and after stopping volume (1) next bar make higher high,close on same price as high of bar num. 1 , next bar (2) was test of supply , I had entry signal on 500 V chart after break high of test bar , so I almost push the button,but I told myself ........it has not potential of move ,volume is poor , so i didnt take trade and close the platform,switched off computer ..... so result is not bad ?? ...market is unpredictable , small lesson for me

 

http://www.sierrachart.com/userimages/upload_2/1243778229_55_UploadImage.png

 

http://www.sierrachart.com/userimages/upload_2/1243778377_97_UploadImage.png

 

BACKGROUND

http://www.sierrachart.com/userimages/upload_2/1243779050_0_UploadImage.png

Edited May 31, 2009 by kuky969

[kuky969 10]

Just for review, and for the newbies to this thread, would you please show us or tell us what the signs of distribution are, so we'll know them when they finally show up? Many thanks,

Tasuki

 

I try find distribution in 1 or 4 h. TF chart. I simply trying to find wide spread down bars on very high volume ( peak of volume from a few last bars) and subsequently price didnt move back or move back very slowly on decreased volume and next quick down move on extra high volume bar. just my view. It is hardly see always on 1 h or 4 h. TF so I try change time frame to 2 hour. But often I simply dont see it. Often I try find very nice "end of rising market" on bigger TF.

Edited May 31, 2009 by kuky969

[2trade 10]

Hi eiger B was selling C was potential stopping volume agree D was excellent area for no demand short G agressive long no supply test 3 bars after K was high effort no result supply bar @ previous areas of demand E and F---

 

Good Stuff Eiger:)

[ESTRDR 10]

eiger, i am wondering what your take is on yesterdays session end action

 

another time those guys who trade over 100k of contracts in a few minutes showed their hands.

 

 

[Tasuki 10]

Just let it go. The points for and against TG was made over and over very clearly. Please let this thread stay on track for the people who are interested in it. If you are against VSA and/or TG then simply don't read the thread and focus on things which do interest you.

 

If you think VSA/TG is misleading people, instead of telling everyone how bad it is, open a new thread to show and educate people about how they should be trading.

 

Well said, sevensa! Just let it go! The points made are important, no doubt about it, but they've been said over and over for three threads now.

 

Personally, I want to get back to VSA for trading. I tried to convince soultrader that we needed a thread where you could only post if you shared a chart. He didn't buy it, but I still think it's a good idea. You know the old saying, "say it with flowers"? Well, I suggest that we "Say it with charts".

 

The attached chart is of DXO, a proxy for crude oil. Nobody has ever posted a chart of DXO on this forum, which brings up a point I want to make--there are thousands upon thousands of interesting charts from all manner of trading vehicles that we could be sharing. Here I go quoting a well-known saying again---remember that old line from World War II, "smoke 'em if ya got'em" (famously quoted by the protagonist played by Bruce Willis in the movie "Die Hard")---

well, I say,

"Post 'em if ya got 'em!"

 

Tasuki

[Eiger 10]

Yesterday, I was talking with a group of traders about support and resistance. Four points were made:

 

1. Look for obvious levels of S/R - levels that all traders can readily see
   
2. Understand that S/R levels should be thought of not as specific numbers, but as an area or zone
   
3. Note that what was once support will often turn into resistance and what was once resistance will often become support
   
4. Look for a confluence of S/R where multiple trend lines and/or multiple time frames form a S/R area
   

 

We had this situation occur in the premarket trading this morning in the S&Ps. The 60-minute chart shows yesterday's high became support this AM - an obvious level. The 5-minute time frame tested this old resistance-now-support area or zone - a confluence of support. When then get a high-odds set-up to trade long --the classic Wyckoff Spring at an obvious area of support, which takes us to new highs - it doesn't get much better than that!

 

Hope this is helpful,

 

Eiger

[DbPhoenix 42]

When then get a high-odds set-up to trade long --the classic Wyckoff Spring at an obvious area of support, which takes us to new highs - it doesn't get much better than that!

 

Hope this is helpful,

 

Eiger

 

Perhaps you're thinking of Wyckoff's "springboard", which is addressed in detail in his course. There is no mention of "springs". Or perhaps there's a VSA pattern that matches what you see in the chart.

 

Incidentally, it's probably worth pointing out the resistance at 924-5, particularly for those who aren't scalping.

Edited June 19, 2009 by DbPhoenix
Add resistance note

[Eiger 10]

No, this is hardly about the springboard. Nor is it about a pattern. Wyckoff found little value in patterns such as flags and pennants, head and shoulders, rectangles and boxes, etc. He found them unreliable, as does VSA. This is about the Wyckoff principle of the danger point and the ability to rally away from that danger point. In a successful Spring, the market will dip below support and into the danger of falling bearishly, but instead turns around and rallies back above the danger point, as it did here. It is a choice point to buy, and certainly not a place to be thinking about a short. This Spring gave at least 3-4 points in premarket trading and, given the higher high above yesterday's high (i.e., bullish market behavior) all or a portion of the position could be held for a play to the next obvious resistance level of 925 -- hardly a scalp.

 

Good to see you cleaned up you 7:33 AM post about your box pattern 1462 and the short you called for. The Naz has been the relative strength leader (another important Wyckoff concept) and had the same pre-market Spring. Springs are well worth studying. You can learn all about them in Unit 3 of the Richard D. Wyckoff Course on Stock Market Science and Technique. Relative strength is also a helpful concept and added to the Naz Spring. Relative strength and weakness is found in Unit 2.

 

Hope this is helpful,

 

Eiger

Edited June 19, 2009 by Eiger

[BlowFish 10]

Ahh a test :D Actually i think I am up to date on the lingo except some of the SMI additions creeks, boy scouts, ice flows, polar bears etc.

[DbPhoenix 42]

No, this is hardly about the springboard. Nor is it about a pattern. Wyckoff found little value in patterns such as flags and pennants, head and shoulders, rectangles and boxes, etc. He found them unreliable, as does VSA. This is about the Wyckoff principle of the danger point and the ability to rally away from that danger point. In a successful Spring, the market will dip below support and into the danger of falling bearishly, but instead turns around and rallies back above the danger point, as it did here. It is a choice point to buy, and certainly not a place to be thinking about a short. This Spring gave at least 3-4 points in premarket trading and, given the higher high above yesterday's high (i.e., bullish market behavior) all or a portion of the position could be held for a play to the next obvious resistance level of 925 -- hardly a scalp.

 

Hope this is helpful,

 

Eiger

 

Actually, it's all about the springboard, since that is what has been forming since yesterday morning. And though I agree about Wyckoff's attitudes towards the Schabacker-style pattern, the springboard is a pattern, as is the hinge.

 

In any case, this isn't about danger points, either, unless you consider anything outside support or resistance to be a danger point. But that can lead to problems in real-time trading.

 

And, again, there is no mention of "Springs" in Wyckoff's course.

 

As for the scalp, I guess it depends on how you define "scalp". When you posted your chart, price was at 22.5. So far, it hasn't been able to get past 23.

 

But getting back to VSA, can you describe all of this in VSA terms rather than Wyckoff since this is the VSA Forum?

 

Hope this is helpful.

 

Good to see you cleaned up you 7:33 AM post about your box pattern 1462 and the short you called for. The Naz has been the relative strength leader (another important Wyckoff concept) and had the same pre-market Spring. Springs are well worth studying. You can learn all about them in Unit 3 of the Richard D. Wyckoff Course on Stock Market Science and Technique. Relative strength is also a helpful concept and added to the Naz Spring. Relative strength and weakness is found in Unit 2.

 

Ah, a change to your original post. What short did I call for? What I wrote was "Just a note to point out that premkt activity highlights 62 yet again as the price level to pay close attention to." Hardly a call to short. Those who've read the material know quite well that resistance can become support when price rises into it.

 

As for "Unit 3", that's part of the SMI course. As I said, Wyckoff makes no mention of them.

Edited June 19, 2009 by DbPhoenix