VSA on Daily Stock Charts

[DreadK 10]

I have a request/question for help from the experienced VSA traders on this forum.

I’ve been trading a particular pattern in the markets for sometime now known as a Pinbar. See the first attachment.

 

I know this pattern has a high probability of turning the market. I know that strict VSA / Wyckoff methodology does not use the Open so this pattern would never appear in VSA, however having read Todd Kreuger and others on VSA they seem to advocate the use of the Open to enable a better read on market activety.

 

I look for this pattern on the NYSE and NASDAQ on Daily charts.

I’m hoping that the VSA method will help identify the set ups that have the best chance of success.

 

I have read Mastering the Markets and I’ve also read a number of articles by Todd Kreuger and I’m in the process of working my way through the VSA Summaries on this thread.

 

I’m not asking to be spoon fed VSA set ups, all I need is someone to push me in the right direction and also help me with my analysis. I think I can identify the current bar, however it’s the background that I’m having issues with.

 

 

I’ve added a couple of my charts that I’m working at the moment.

 

What I know so far is that a Pinbars in some ways resembles an Up Thrust, and in some cases looks like a possible Test.

 

My problem at the moment is understanding the backgroud and how that fits into this set up.

 

Notes on the attached charts.

 

Chart attchment 2: I have written a basic alogorithum to identify potential setups this one pop up on the 10th Jan. Can that Pinbar be characterised as a Test of Demand?

This patterns appear on high volume low volume, rising volume falling volume.

 

Chart attachment 3: This appeared on the 5th Jan on high volume is this a selling climax?

 

Chart attachment 4: This one failed and was taken for a stop loss. Was it because it was a failed test on low volume. Once I get the hang of this I’m more than happy to start a thread and share my analysis.

 

 

Many thanks

 

DK

[raul 10]

This comments are about Chart 1.

 

I found the terminology in VSA needlessly confusing, so I use my own interpretation, I also use candles instead of bars.

 

We have two bullish bars followed by a bearish bar, followed by an indecision bar that closes barely below the previous bar close, showing a low probability of the down move to continue.

 

The next bar is bullish and strong but is followed by two Dojis (candlestick terminology), these bars have long tails which show that there is effort to pull the price down and little success to make the price go higher, a Doji usually signals the end of a move or that the end is near.

 

Pin bar is a shooting star, great effort to push the price up but failed and prices closed even lower than previous two bars hinting that prices are going to fall and it does in the next two bars.

 

Why did the down move not continue? I can only guess without seeing a bigger chart. It certainly exceeds a pullback to a .68 Fib level. A bigger picture might show a pivot point or a previous support/resistance level.

[DreadK 10]

Thanks Raul for posting a reply.

 

I've attached a couple of charts on Jefferies Group (JEF).

 

This particular pattern formed in today's trading (26 Jan 2012). Its look like a well formed Pinbar, its on a swing high, and touching the 200 MA (I'm not a huge fan of moving averages but on occasions they seem to give some S/R).

 

If you take a look at the Weekly chart (attachment 2) its sort of on the 38.2 Fib re-trace of the current down trend.

 

I'm look to go SHORT Jefferies (JEF) with the Weekly trend (down), counter trend on the Daily (UP).

 

Right from a VSA prospective:

 

Wide Spread Bar appears on the 13th closing in middle of the bar, i'm assuming this means that the professionals are selling into the retail tradings buying into the daily up trend.

 

Then on the 20th and 21th is it a test on low volume, the pros pushing the price up to test demand???

 

Then on the 26th we have the enter bar, short when price trades below the low.

[raul 10]

I agree with your analysis. On the weekly chart you can see that that prices are rejecting a previous resistance level from August-September. Make sure you have a stop just in case. Price could be taking a rest before heading for 50 or 61.8 level but the pin bar and decreasing volume are bearish.