[VSA] Volume Spread Analysis Part I

[mroalan 10]

http://img300.imageshack.us/my.php?image=scr4386ddqz3.png chart refering to volume on small bodied candles.

[mroalan 10]

looks like i,m in business!! away for the W/E. pop in sun.

[RAVIN 10]

VSA in Realtime folks,

 

Attached 5min chart, R1 is pivot resistance

 

1. What do you read

2. What do you expect

3. What is the trade, stop loss, target

4. What price action would you like to see that will negate the original plan

 

cheers

[RAVIN 10]

sorry, forgot to upload the chart

lets try again

[TinGull 10]

Hmmm, to me looks like I'd be getting short with a stop above the high around 8120. But...I'm no expert, so who knows what'll happen.

[RAVIN 10]

Hmmm, to me looks like I'd be getting short with a stop above the high around 8120. But...I'm no expert, so who knows what'll happen.

 

No particular expertise required, the VSA signs are all there

1pt here is $25 , so your stop is at a risk over $500, what about the target .

[TinGull 10]

The daily pivot would be a target. Bottom of the WRB. the WRB is a support zone for price now, so I'd be cautious.

[TinGull 10]

Actually, looks like the WRB is holding price inside it now....so, could be all good.

[TinGull 10]

[RAVIN 10]

O.K, let's wait for some more response, if any further context is required would be glad to provide

[RAVIN 10]

o.k, so you would short at 8098, stoploss 8121, (23pts away), target 8076, low of that WRB (22pts), what about the support level of recent swing low at 8088.

 

Anyway once again the chart this time with a strong VSA indicator (red rectangle on Tradeguider indicating upthrust, also the correct Pivot values on it, infact look even better with price rejection at R2.

 

However we shall wait for more response

[ranj 10]

That inverted hammer looks like an upthrust.

 

The price action appears distributive in nature. Buying climax, followed by the the supply overcomming demand. upthrust, tend to occur at the end of the distribution phase.

 

I would short right after the upthrust with a entry trailing sell stop below the low of the Upthrust. I would pull my sell stop order if there is high vol. WRBody up bar.

 

Stop set at he high of the 9:05 bar.

Will look to add to my position after a break of the 9:10 low.

Target, would be the low the WRB and then the pivot low, but I like to look a higher timeframes to determine targets.

 

Rajiv

PS. What market is this?

[TinGull 10]

So, I was right?

[mr.marcus 10]

......it seems most people are concerned more with individual bars that the action leading to this point...thus isolating and reducing context...blinkered analysis.This in turn leads to very much ..."yes/no" ..decisions....long or short....the intent and motive of the price movement is key.There is no need for more context than this chart.

 

i will post a chart of what i beleive is likely to happen next.I no longer believe in giving the answers....unless individuals have come to conclusions for themselves...been thru the thought processes...then the reasons given ar worthless anyway.VSA attempts to box the market and leaves huge holes in between....context is lost....and also contains many illogical assumptions.However ,the path of we choose is our own responsibility....and part of the learning process.Lets just say VSA has too much assumption inlvolved....and its followers mainly assume that these assumptions must be correct.NOTHING of true value is available.....for $50,$500,$2000.....anyways.

 

The market has,with highest probability created a LEFT HAND SHOULDER and were now instead that shoulder...building to break to the upside to fake,test and exchange with remaining demand....and creating a high degree of weak hand long open interest.We are likley to reverse between 830 and 840....once the exchnage is complete.We are currently showing low volume.....at this point ...yes sellers are in control....very few..and unsustainable.....the extra shorts about to be generated will help conclude the bigger picture.The Intent is still long....The motive....to create final demand to allow the exchange to conclude....and create serious fuel for downside to allow the "professional" sellers to profit.

 

Every bar is a part of this chain....starting and closing points of these bars are abstract...the market is a continual flow ...like a movie.....not a series of holiday snaps.So to see beyond these abstract time slots is key.The market doesnt like to be boxed.Understand their creation and the action merely confirms high probability outcomes we already had in mind.If not you are reacting.When you buy and sell....you do so with regards to value....value is the current price compared to projected future price .Future flow also has to be projected.Your size needs to be filled at these projected future prices.Professional decision making is based upon a projection of future order flow.Anyways....back to meetings.

 

Mark j

[rayl54292 10]

Per what Pivot has told me, BootCamp is definitely worth the money.

 

Now...here's a stock I picked up on while learning this new scanning software I'm testing out.

 

PCU

 

It's a copper mining company, and copper's been on a tear. This was some GREAT VSA stuff here. Gap down into the 200ma which was bought as evident by the hammer. The stock still closed below the close of the prior bar, so still looked "bad" at the end of the day ticker. Looking closer we see...

 

Enormous volume with a hammer closing at the highs. Awesome yet? Well, next day gapped UP and closed the gap only to trade up again and give another hammer! Currently sitting 56% higher from the close of that second hammer. Yesterday had nice increase in volume, nice spread, closed just off the highs breaking a minor resistance. Yum...VSA tastes like cake sometimes

 

 

nice job. if possible can u share the name of your scanning software? i've worked on a few things with mixed results. thanks in advance, for this chart and your contribution to fowarding the art of VSA.

 

r

[WHY? 16]

sorry, forgot to upload the chart

lets try again

Ravin, could you please post the same chart as a bar chart with open and close on it and of course the volume.

 

Thanks

[mr.marcus 10]

...heres an extended chart of expectation for the posted chart....it is not possible to project beyond this point with the given information.

 

To add,i tried to amend my previous message as i didnt want it to be taken too harshly,so attempted to remove the comments on VSA but alas admin rules state it is not possible.Also pretty poor grammar.

 

Anyways, happy trading

 

Mark J

[TinGull 10]

nice job. if possible can u share the name of your scanning software? i've worked on a few things with mixed results. thanks in advance, for this chart and your contribution to fowarding the art of VSA.

 

r

 

Thanks for your kind words. The scanning software I was using there is TeleChart.

[Reaver 10]

I agree with rayl on that one...I am going to dig into vsa to see what I can get. Thanks for the information to peruse.

[priceman 10]

......it seems most people are concerned more with individual bars that the action leading to this point...thus isolating and reducing context...blinkered analysis.This in turn leads to very much ..."yes/no" ..decisions....long or short....the intent and motive of the price movement is key.There is no need for more context than this chart.

 

i will post a chart of what i beleive is likely to happen next.I no longer believe in giving the answers....unless individuals have come to conclusions for themselves...been thru the thought processes...then the reasons given ar worthless anyway.VSA attempts to box the market and leaves huge holes in between....context is lost....and also contains many illogical assumptions.However ,the path of we choose is our own responsibility....and part of the learning process.Lets just say VSA has too much assumption inlvolved....and its followers mainly assume that these assumptions must be correct.NOTHING of true value is available.....for $50,$500,$2000.....anyways.

 

The market has,with highest probability created a LEFT HAND SHOULDER and were now instead that shoulder...building to break to the upside to fake,test and exchange with remaining demand....and creating a high degree of weak hand long open interest.We are likley to reverse between 830 and 840....once the exchnage is complete.We are currently showing low volume.....at this point ...yes sellers are in control....very few..and unsustainable.....the extra shorts about to be generated will help conclude the bigger picture.The Intent is still long....The motive....to create final demand to allow the exchange to conclude....and create serious fuel for downside to allow the "professional" sellers to profit.

 

Every bar is a part of this chain....starting and closing points of these bars are abstract...the market is a continual flow ...like a movie.....not a series of holiday snaps.So to see beyond these abstract time slots is key.The market doesnt like to be boxed.Understand their creation and the action merely confirms high probability outcomes we already had in mind.If not you are reacting.When you buy and sell....you do so with regards to value....value is the current price compared to projected future price .Future flow also has to be projected.Your size needs to be filled at these projected future prices.Professional decision making is based upon a projection of future order flow.Anyways....back to meetings.

 

Mark j

 

Wow,

 

Mr Marcus, thanks for this insight. It will be interesting how this pans out. There's a lot of good information in this post that I'm going to take in and digest before even trying to reply on the chart. Keep up the great analysis!

[RAVIN 10]

Ravin, could you please post the same chart as a bar chart with open and close on it and of course the volume.

 

Thanks

 

Sure, also pasted a 30min for you ranj, wonder if that provides more context for your trade management. There is a specific reason I did not mention the market. These were realtime trades and lessons learnt, the intent was to share that.

 

Tingull, it is not important to know what happens next, nobody knows that with certainty but ofcourse we enter the market, in this case short with the expectation that price would go lower, otherwise what is the point. Now why is that, because we have observed these setups before and the ensuing price movement or have tested them prior to trading with real money.

You were right to go short, afterall there are all the signs in the background of weakness, the white bozo with vol indicating selling pressure, then a massive dragonfly right at R2 (price rejection) following by a black bozo, effort to drive down prices etc, finally an upthrust, ideal setup, there was no choice but to go short if you were trading this timeframe and based on the information available at the time, not HSA (Hind Sight Analysis ) but pure VSA (Volume Spread Analysis)

Now you have a 30min chart, any change in your strategy?

[RAVIN 10]

...heres an extended chart of expectation for the posted chart....it is not possible to project beyond this point with the given information.

 

To add,i tried to amend my previous message as i didnt want it to be taken too harshly,so attempted to remove the comments on VSA but alas admin rules state it is not possible.Also pretty poor grammar.

 

Anyways, happy trading

 

Mark J

 

Mark,

 

VSA is being used just as any other TA price based Maths calculations, as an INDICATOR , not as a forecasting crystal ball, it adds another dimension to the market analysis and provides invaluable info. on emergence of buying or selling pressure against a background of strength or weakness, that is it, nothing less , nothing more. It can create that extra edge but does not call every setup and its outcome with certainty, probabiity always reigns supreme. Infact it is so flexible that it seamlessly blends with other TA methods of Support/resistance, Trendlines, MA, Oscillators etc.

 

Back to the chart in question, I do not recall asking for forecasts of the next 8hrs, just the details of the trade in the moment, its management etc with the info. available in front of you on that 5min chart, yet you have forecast and chart out what is likely to happen for the rest of the day, a second rise upto 8130-8140 , then a massive fall and all this you have managed to glean from the info. infront of you.

Please kindly explain your logic, how did you arrive at those exact figures????

[WHY? 16]

Well from what I understand about VSA (and I am in the learning stage.. at the begining) it appears to me the market here is weak according to VSA. We have distribution in the background. A couple of upthrusts. A narrowing of the range. It is like the market is stuck in distribution with not much distribution taking place at the moment. However, it is possible that the distribution at this level has already taken place and it is now consolidating before moving up again. The next bar or two might tell the story. If I were trading this I would not go neither long nor short at this point in the game but I would wait for more info. To use another of Toms concept; If a market is showing signs of weakness but instead goes up then that is a sign of strenght. To sum up, I would wait and see if the present weakness is confirmed. If the market should go down and doesn't go down then I would take a long position but only after confirming this fact. If it does break south over the next 1 to 3 bars then I would short.

 

Sounds like double talk here but this one is hard to call. I simply could not take a position based on the info I have in this chart. I would need more confirmation at this point. The narrow range won't keep going on. It must open up sooner or later and most probably, sooner. It remains to be seen if that will be down or up. If down then that would confirm it for me depending also on the close and volume of that down bar. If up then I would be looking to go long depending again on the close and vol of the up bar.

[RAVIN 10]

Very sound analysis WHY?

Those bars look small on 5min timeframe compared to the previous bozo etc, however we have to remember that these bars be it 30minm 5min, 2min are merely slices of a continuous stream of ticks of an ongoing auction., so size is relative,

 

If you take the same setup, backtest it and keep track of it in future plus the time of the day, when the market is moved down or up quite significantly, plus the confirmation bars after the signal , all add up to a low risk opportunity. Waiting for more confirmation and then entering would be chasing the market and would be arbitrary and inconsitent with any strategy that was developed around such setup. Pulling the trigger on the signal and trigger bar which closed below the signal bar was right if that is your setup and strategy. Majority of the time this setup and the rules of the strategy yield far more profit than the losses incurred when the trade does not pan out

It was an Opportunity because market had shown considerable weakness in the background which was not going to just disappear.

Low Risk because the stop was placed over 5bars back around 8106, (8pts max which is $250, my risk limit)

You are spot on regarding Tom's take on any signs of strength appearing subsequent to the weakness that would signal a rapid rise.

 

For your benefit here is a 30min chart as well, wonder if that provides more context for your decision

[RAVIN 10]

WHY?

 

Here are 2min charts