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vsa with Malcolm

  • #33,841
  • Jul 8, 2021 8:04am Jul 8, 2021 8:04am
Quoting RickM
{quote} Hi Shadowy I was just referencing that EURUSD move. As it was in a bearish trend at that point, the data was strongly in favour of Bids. That means Buyers were placing higher levels of orders that were being executed by aggressive Sellers. So more Buyers but bearish move. We would need to see a high level of Buying market orders at least double the amount of current Sellers liquidity to change direction. Therefore we need a very high volume bar containing more than 75% of Buying market orders to break the downwards trend. It never happened...
Hi Rick,

Thanks for your reply. I have to say that your understanding of the market is definitely way ahead of how i'd see it. If you don't mind, can i ask what you would mean by saying, "We would need to see a high level of Buying market orders at least double the amount of current Sellers liquidity to change direction." Therefore we need a very high volume bar containing more than 75% of Buying market orders to break the downwards trend.

If i'd translate that to simpler terms, would it mean that we would need to see a high volume bullish breakout bar to change direction from bears to bulls?

Also, when you mentioned, I was looking for increasing volume to go long or below average volume to go short.
Volume just wasn't there so I took about 15 short scalps over a few hours (all separate trades) to take advantage of the big players intention

By this, what i can understand is that in the 1H the trend was already bearish as indicated by your downwards slowing bands. Hence, bears in control. So any low volume up bars you would short or if you get any high volume up bars, you would long? on the same timeframe or on smaller timeframes?
  • #33,842
  • Jul 8, 2021 8:32am Jul 8, 2021 8:32am
Quoting shadowy
{quote} I guess your using the high, low and close of high volume bars or what gavin would term as "yao ming" bars as S/R points?
Not necessarily Yao Ming bars, I also use what I call expansion volume. I'm not sure if there is another name for it, but expansion volume is a huge increase in volume compared to the previous bar, its not necessarily the highest volume of the session or day.

Quoting shadowy
{quote} Quoting what you had said on a previous post, "I start out by looking for high volume bars and patiently wait to see how the market reacts to their close. Sometimes I will see, for example, a weak bar and price doesn't react to the close, but instead reacts to the low of the bar. I take note of it, but I don't place trades unless I see rejections off the high volume bar's close."
My trading has evolved but this is still true, high volume closes are still king in my trading. H/L is secondary and the 50% I've played around with it, but for me HVC are just easier for me to see/understand.

Quoting shadowy
{quote} I understand VSA itself is subjective but what would be an objective way of determining rejections off the high volume bars close.
Don't be afraid of subjectivity. Market conditions change, market participants change.. Not all trending markets look the same, not all ranging markets look the same. Subjectivity allows you to adapt.

Quoting shadowy
{quote} The way that i have been doing this is by using a lower timeframe to spot turning points using several of wyckoff concepts..
In Forex I spend 90% of the time on a H1 chart, and I'll drop down to a M15/M5 to find entries and watch for support to break down if I'm short for example.
  • #33,843
  • Jul 8, 2021 8:50am Jul 8, 2021 8:50am
Quoting shadowy
{quote} For educational purposes, Would you have taken this trade? this was from USDJPY yesterday.
Before I start out, letme say this I look at both the highest volume bar and the volume from the pair's home session. I have a lot of experience trading JPY pairs, honestly I put more weight on Asia volume than I do the highest volume of the day.

The only way i would've considered a short is if price came up to the high volume close of Asia. I don't like the HVC that you pointed out, I don't like price flip flopping from one side to the other on a close. I like to see a nice clean rejection and then price to leave the area.

The M30 opening bar of Nasdaq is getting close to finishing and I want to trade that, so tonight I'll mark off a chart for the CHFJPY that you posted a few days ago, that chart was honestly a perfect setup. I just didn't respond to your post because I thought you were looking for specifically WRB analysis which I know nothing about.

**Edit** If you look at July 2nd that is expansion volume, its not the highest volume of the session.. But look at that big increase compared to the previous bar, even look at the highest volume of that session. See how the highest volume of the session is just barely higher than the expansion volume? When I see that, its a dead give away the expansion volume is the professional money bar.
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  • #33,844
  • Jul 8, 2021 8:58am Jul 8, 2021 8:58am
May I ask a question regarding the below chart?
This type of behavior confuses me often.
The red arrow is the bar I am referring to (Daily Chart).
Biggest volume in "almost a month" which shows an exhaustion bar (closing well of its highs)
But the next 2 days still are up closes (albeit with lower volume).

Does this mean - the massive sellers on that exhaustion bar are being chewed through from buying?
If so - then how is the volume lower but still going up?

Thank you for any insight.



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-B
  • #33,845
  • Jul 8, 2021 9:20am Jul 8, 2021 9:20am
Quoting kicktothehea
May I ask a question regarding the below chart? This type of behavior confuses me often. The red arrow is the bar I am referring to (Daily Chart). Biggest volume in "almost a month" which shows an exhaustion bar (closing well of its highs) But the next 2 days still are up closes (albeit with lower volume). Does this mean - the massive sellers on that exhaustion bar are being chewed through from buying? If so - then how is the volume lower but still going up? Thank you for any insight. {image}
There are a lot of reasons why you can see selling and price continues to go up. It could be just profit taking and not active selling, it could be a hedge fund with a little money who sold prematurely.

Its not enough to take a trade when you see high volume selling, we need to see price react to that selling and prove its actually weak. This is where testing comes into play.
  • #33,846
  • Jul 8, 2021 9:31am Jul 8, 2021 9:31am
Yup that part I understand regarding then need for a test before selling to prove weakness is present.

I am just curious as to what kind of behavior (as you mentioned - profit taking, Hedge fund sold early) etc could cause a massive volume bar to get chewed into like that on lower volume up bars.

Thank you!
-B
  • #33,847
  • Jul 8, 2021 9:40am Jul 8, 2021 9:40am
Here's an example I took earlier today..

The HVC from yesterday's FOMC bar, during Asia AU had a nice 2 bar reversal into the close.

Then marked off the expansion volume from today's Asia session and you see a little ND UT that couldn't quite make it to the close. Nice clean reactions to volume. If price is flop flopping around a close, do yourself a favor and walk away.
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  • #33,848
  • Jul 8, 2021 10:01am Jul 8, 2021 10:01am
Quoting kicktothehea
Yup that part I understand regarding then need for a test before selling to prove weakness is present. I am just curious as to what kind of behavior (as you mentioned - profit taking, Hedge fund sold early) etc could cause a massive volume bar to get chewed into like that on lower volume up bars. Thank you!
I think I understand you now.

The daily chart does a great job of showing the weakness on July 6th, but I don't think its giving the whole picture and is a little misleading on what happened on July 7th.

Drop down to a H1 chart and we have obvious HV weakness on July 6th. Moving to July 7th, price rallied because it needed to test the H1 weakness which it did and came off. Today we had a markup up and through the July 6th HVC, but looking at the current PA that is dropping back down through the HVC it looks like today's markup was only to sell more.

Keep in mind I've only been trading Gold Futures for about a week, all of my experience is in Forex so I'm still learning it.
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  • #33,849
  • Jul 8, 2021 11:02am Jul 8, 2021 11:02am
Excellent reply thank you very much!
-B
  • #33,850
  • Jul 8, 2021 5:49pm Jul 8, 2021 5:49pm
On the off chance that anyone else uses Anki, I'm sharing some VSA flashcards to pay it forward since this thread has been so helpful. It's based off of some old slides from one of the greats that have been lightly repurposed.

If you don't use Anki, download the desktop/mobile app and check some tutorials on YouTube. It is very popular in med school & most doctors in the last 5-10 years swear by it apparently.

https://ankiweb.net/shared/info/1189135969

I may end up creating more flashcards using some of the breakdowns in this thread too
  • #33,851
  • Jul 8, 2021 11:18pm Jul 8, 2021 11:18pm
Price came up to the high volume close from yesterday's London session.

Price wasn't going to be able to push through it on that low volume. Could be a little demand on this current bar and also its 19 points in profit so good spot to TP.
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  • #33,852
  • Jul 9, 2021 8:13am Jul 9, 2021 8:13am
Quoting Macallik
On the off chance that anyone else uses Anki, I'm sharing some VSA flashcards to pay it forward since this thread has been so helpful. It's based off of some old slides from one of the greats that have been lightly repurposed. If you don't use Anki, download the desktop/mobile app and check some tutorials on YouTube. It is very popular in med school & most doctors in the last 5-10 years swear by it apparently. https://ankiweb.net/shared/info/1189135969 I may end up creating more flashcards using some of the breakdowns in this thread too...

I had no idea what Anki is - downloaded it on my pc - added your deck - that is AWESOME.
Thank you so much for sharing that!
-B
  • #33,853
  • Jul 15, 2021 12:38pm Jul 15, 2021 12:38pm
chart dump, thread bump.

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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #33,854
  • Jul 19, 2021 7:19am Jul 19, 2021 7:19am
Here is a short on EJ, at least for me EJ tends to be one of the harder JPY pairs to trade. Most of the JPY crosses I just look at the Asia volume, but on EJ also have to take into account the volume during London.

Looking at Friday's Asia volume there was a 2 bar reversal and today pushed through the HVC on high volume. High volume pushing through support is weakness. Price rallied and came back up the HVC with very low volume. Price did drift around the close which isn't great, but the fact that price came up on such low volume is was clear they weren't interested in high prices.

I set a hard TP on this, I wasn't sure if today was just going to run the lows to find support or push through. Looks like i dropped the ball on that part.
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  • #33,855
  • Jul 20, 2021 3:59am Jul 20, 2021 3:59am
I took a long on audcad, HVC from July 14th on the CAD rate announcement.

Lost about 2% on this trade due to adding more positions as price was rising. I took a few partials because of a high volume on the M15, but held most of my position, I might have brought my stops up a little too quickly price seems to be still testing 9340 level.

Not a great trade, but this goes to show there will always be losses and mistakes, it helps to have thick skin when trading.
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  • #33,856
  • Jul 20, 2021 3:29pm Jul 20, 2021 3:29pm
Please explain on an example / graph how Smart Money performs testing, I can't understand it . Thank you in advance.
Thank you and best regards.
  • #33,857
  • Jul 21, 2021 12:30am Jul 21, 2021 12:30am
Quoting Atm_x
Please explain on an example / graph how Smart Money performs testing, I can't understand it . Thank you in advance.
Look two posts above yours and you will see a text book example of a test.

Alternatively visit HiddenGap's profile page and search his posts for "Sharp Shooter". He has a ton of posts on it with detailed explanations on testing.
  • #33,858
  • Jul 21, 2021 3:24am Jul 21, 2021 3:24am
@Anotań thank you very much, I'm starting to study .
Thank you and best regards.
  • #33,859
  • Aug 1, 2021 11:14am Aug 1, 2021 11:14am
Quoting Atm_x
Please explain on an example / graph how Smart Money performs testing,...emphasis added
I'm assuming the question really is Why, or, For what purpose (s), does the Smart Money perform testing? This is not a knock on your English skills by any means, It's simply to point out that before we get to the "How", we need to first start with the "why". In fact, "how" they test is a direct consequence of "why" they test.

The Smart Money is always testing; They're testing when the Market is going UP and they're testing when the Market is going DOWN. When the Market is going UP, a successful test tends to imply further strength, and when the Market is going DOWN a failed test tends to imply further weakness. This is why failed tests in a downtrend can be as telling as successful tests in an uptrend.

So what is a "test"?

The base definition of a test is a (1) narrow range DOWN bar that (2) closes on or near its high (3) on volume less than the previous two bars. Again, this is just the base definition. In the real world, not all tests adhere to these three elements. You will, for example, see tests that close UP from the previous bar.

So what is being "tested"?

Ultimately, the Smart Money employs testing to determine the presence, or absence, of SUPPLY (or Selling). The Smart Money believes in the general principle that selling begets more selling. Accordingly, once there is evidence of the presence of sellers (SUPPLY), the Smart Money wants to determine if there are more sellers (Supply) out there that could cause the Market to move down, which would m mean the Smart Money (who are long) would have to pay more to absorb the selling (Supply).

Take a look at the chart (s) below.

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At point #1, we see a widespread DOWN bar that closes well of its lows on increasing volume that is greater than average. According to Volume Spread Analysis (VSA), this is stopping volume and it is a sign of strength. Why is it a bar of strength? (1) it closed well off its lows and (2) the next bar us UP. If this was a weak bar, why would it close off its lows and why would the next bar be UP?

But we must also understand the underlying market principle: for every buyer, there is a seller. That is a transaction cannot happen until a buyer and a seller agree upon a price to transact. Therefore, there are sellers present on his bar. More importantly, volume represents activity. So some of this increased activity must be from sellers. The question thus becomes, has everybody that wanted to sell sold on this interval, or has the appearance of the sellers in this interval emboldened more sellers to come into the Market? In other words, is selling going to beget more selling?

Let's jump ahead to #3 (the Test)

Notice that this is a narrow range DOWN bar that closes on or near its high with volume less than the previous two intervals. Additionally, note that this interval is within the range of our stopping volume interval (#1). In other words, in an area where the sellers really showed themselves, we see a DOWN bar with decreasing volume. New sellers are not enticed to enter the market in this area where previous sellers entered. Many traders buy highs and sell lows, which is why a test bar usually has a lower low than the previous bar. But again, this "move down" fails to attract more selling.

The next interval is UP, which confirms the test and the Market takes off from there.

Take a look at #2

In VSA terms this bar is either No Supply or No Selling Pressure. Either way, it is a DOWN bar that closes near its low on volume less than the previous two bars. Despite the reality that there every transaction is two-sided, we tend to think of this interval as having few to no sellers. This begs the question if there are few to no sellers present, why is the Market falling? This brings us back to #3. If there is an absence of willing sellers, then nobody should be enticed to sell upon seeing price make a lower low than the previous interval.

So the Test at #3 shows the two times tests typically appear:

(1) when there is the presence of selling as evidenced by HIGH VOLUME
(2) when there is an absence of selling as evidenced by LOW VOLUME
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #33,860
  • Aug 19, 2021 2:59am Aug 19, 2021 2:59am
Some really nice principles on EURAUD.

1. Up Thrust - Climatic volume for Asia, I think this was NZD rate statement which NZD is closely related to AUD. This is kind of a bad up thrust, the bar opens and closes below the previous bar, which IMO is a red flag. Also the low of this "up thrust" looks like it found support off the close from bar B.

2. Test bar - If bar 1 was an up thrust, why is there a test as price tries to push through the lows? Should be seeing increasing volume as price pushes through the up thrust showing sellers. This test is showing no sellers are present, if price isn't weak.. it must be strong.

3. Squat Bar into the close of expansion bar B, the next bar after the squat is an up bar increasing in volume. Looks like buyers are interested!

4. FOMC - High volume shakeout into the close of bar A.

I closed out the trade, the last few bars price has had a significant up move and volume is starting to pick up, so the potential for supply is there.
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