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Trade Using VSA (Volume Spread Analysis)

  • #2,781
  • Edited 8:46pm Aug 17, 2009 6:43pm | Edited 8:46pm
Hey guys,

Looking for some feedback regarding the following long I have just taken.

My overall view for the currency is to move lower. However, this setup for a long seems valid and may catch wave 3 of the corrective move back up to the grey zone i have highlighted. This zone is the confluence of a 38.2% retracement, yesterdays low, S1, and yesterdays high volume pivot (which is made obvious when the market profile indicator is applied, i take it off cos it annoys me).

Anyway... as far as VSA goes, the down bars happened over low volume (no suproses there given the time it happened) and we got a reverse upthrust/pin shaped bar on significant increase in volume. For me, I would say there is some buying interest coming in. Maybe not strong demand, but profit taking off the back of hte big move we have seen over the last 48 hours or so.

Let me know what else i should be considering as far as VSA is concerned.

Thanks.

PS - i take these trades all day long - but looking to refine my understanding of VSA setups and entries.

MM.

UPDATE: 1/2 off @ 8240 and the other half @ 8260
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"If it bleeds ... we can kill it"
  • #2,782
  • Aug 17, 2009 9:30pm Aug 17, 2009 9:30pm
OK, so not many people about today. Anyway, we have just had RBA meeting minutes out causing a bit of volatility. Wide ranging, high volume bar... but no direction and closing off its highs - suggests the news wasn't as bullish as some would like. Supply in the market off that release. Upthrusts off resistance on the 15 and 5 minute timeframes. Took a break of the 5min and will be taking half off at the daily pivot... around 8225.

Would prefer to be taking shorts from around 8270... but whatever... we'll see how it goes.

Short @ 0.8250 (average from 42 and 58)

MM
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"If it bleeds ... we can kill it"
  • #2,783
  • Aug 17, 2009 10:26pm Aug 17, 2009 10:26pm
Update: Half off @ 8230.

Low volume down bar (5min) tells me she's running out of steam at the daily pivot and unlikely to punch through with any conviction first off. It could... but better to be safe...
"If it bleeds ... we can kill it"
  • #2,784
  • Aug 17, 2009 10:44pm Aug 17, 2009 10:44pm
Hello ladies and gents.

First quick look at the Euro/USD (5 min.):

The BBs pushed thru supply on a wide spread (EB7) candle with very high volume. This candle was also an Effort to Rise candle and also tells us that there has been a change in the supply/demand dynamic in the market.

**Edit***:
Markets don't like high volume up candles, because they could contain hidden selling. Sometimes, however, high volume up bars mean strength. If we look to the left and see tops and see an immediate test after the up candle, it is more likely strenght not weakness. Absorbption volume.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,785
  • Aug 17, 2009 10:49pm Aug 17, 2009 10:49pm
Nice,

Thanks hidden gap. Look forward to learning alot from you. Any chance you could share a littel of your trading background with us? That would be cool - you can always PM me if you're uncomfortable doing so on the public forum...

Cheers,
MM

PS - I ask because I assume a professional background.
"If it bleeds ... we can kill it"
  • #2,786
  • Aug 17, 2009 11:57pm Aug 17, 2009 11:57pm
Quoting Ari Gold
OK, so not many people about today. Anyway, we have just had RBA meeting minutes out causing a bit of volatility. Wide ranging, high volume bar... but no direction and closing off its highs - suggests the news wasn't as bullish as some would like. Supply in the market off that release. Upthrusts off resistance on the 15 and 5 minute timeframes. Took a break of the 5min and will be taking half off at the daily pivot... around 8225.

Would prefer to be taking shorts from around 8270... but whatever... we'll see how it goes.

Short @ 0.8250 (average...
Very nice.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,787
  • Aug 18, 2009 12:09am Aug 18, 2009 12:09am
Trying to get the pic in as soon as possible. Will say more in update.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,788
  • Aug 18, 2009 12:31am Aug 18, 2009 12:31am
Nice trade. She's popping up nicely. What would your thoughts be looking at a 4hr chart of the euro right now? Textbooks would tell me its a pin bar/upthrust on high volume coming off resistance area and 23.6% retracement - after a rally on low volatility/volume... also a head and shoulders pattern with a fairly well established trendline being broken from the last strong move lower.

Curious as to whether you analyse those higher timeframes for a directional bias... or whether you stay on the same timeframe and read the whole picture from there...

Cheers,
MM
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"If it bleeds ... we can kill it"
  • #2,789
  • Aug 18, 2009 12:42am Aug 18, 2009 12:42am
Same chart as before, but with a some more reasons to enter.
Of course we start with the background.

We have seen a wide spread (EB7) candle on very high volume push thru supply. This is strength. When weakness enters, it enters on up bars. This up bar is strength, however, and we see an immediate no supply bar confirming this.

The thing we notice is a wide spread down candle that closes in the upper portion of its range, creating a long shadow in the process. Buyers stepped in and pushed price up. We know strength, when it enters, enters on down bars. If this bar had been weakness, then the close should be lower in the range. All the volume represents Big Boy (BB) support.

Next look at the series of there blue arrows. Each is a form of test/No supply. Notice how with each on the volume decreases. Simply, sellers become more and more disinterested.

Our last clue (not vsa), the last test bar is basically engulfed by a white candle with increasing volume. From a pure VSA perspective, it is an up candle closing near its highs on higher volume following a test: Strength.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,790
  • Aug 18, 2009 12:43am Aug 18, 2009 12:43am
I just realised im over using the word nice. My bad.
"If it bleeds ... we can kill it"
  • #2,791
  • Aug 18, 2009 12:47am Aug 18, 2009 12:47am
HiddenGap,

Awesome post man... keep that shit coming. Love it.

MM
"If it bleeds ... we can kill it"
  • #2,792
  • Aug 18, 2009 12:49am Aug 18, 2009 12:49am
Ari;

I like to look at just one timeframe. If you can read a chart (not that I can ), I don't think you really need to see other timeframes. Markets are fractal. They key is understanding the price action. Or maybe I'm just lazy.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,793
  • Aug 18, 2009 12:55am Aug 18, 2009 12:55am
Sweet, makes sense. I'll be trying to emulate your style and malcomb14) going forwards. Incorporating VSA in my trading has been VERY profitable so far...
"If it bleeds ... we can kill it"
  • #2,794
  • Aug 18, 2009 1:00am Aug 18, 2009 1:00am
Looks like more strength entered here. Climatic action on the white candle but the next candle had increased volume with a narrow range closing in the upper portion of its range. This is a squat/high churn bar.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,795
  • Aug 18, 2009 1:08am Aug 18, 2009 1:08am
Quoting HiddenGap
Same chart as before, but with a some more reasons to enter.
Of course we start with the background.

We have seen a wide spread (EB7) candle on very high volume push thru supply. This is strength. When weakness enters, it enters on up bars. This up bar is strength, however, and we see an immediate no supply bar confirming this.

The thing we notice is a wide spread down candle that closes in the upper portion of its range, creating a long shadow in the process. Buyers stepped in and pushed price up. We know strength, when it enters, enters on...

GM HG - great analysis http://www.forexfactory.com/images/icons/icon14.gif

Might I ask whose charts you are using - I have 3 different ones open and none of my candles match yours!

Regards

Islander
Trading Levels with WRBs
  • #2,796
  • Aug 18, 2009 1:14am Aug 18, 2009 1:14am
Quoting Islander
GM HG - great analysis http://www.forexfactory.com/images/icons/icon14.gif

Might I ask whose charts you are using - I have 3 different ones open and none of my candles match yours!

Regards

Islander
5 min EU
  • #2,797
  • Aug 18, 2009 1:49am Aug 18, 2009 1:49am
One minute after the Frankfurt Open a large Buy hit the market making a 35 pip 1 min candle - that's huge - with high volume. There was no follow thru - so I sold it for good pips as it immediatly retraced back to the prior resistance area around todays DP.

You can see this as the long upside wick on the green shooting star that is the high.....IMO there was profit taking / selling in that candle.

Now price has been unable to break the 6400 level - also the volumes are low - as they were throughout the earlier Asian Session....

I'm now short off the failure to break the 6400 level......TWT...
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Trading Levels with WRBs
  • #2,798
  • Aug 18, 2009 2:06am Aug 18, 2009 2:06am
Quoting Islander
One minute after the Frankfurt Open a large Buy hit the market making a 35 pip 1 min candle - that's huge - with high volume. There was no follow thru - so I sold it for good pips as it immediatly retraced back to the prior resistance area around todays DP.

You can see this as the long upside wick on the green shooting star that is the high.....IMO there was profit taking / selling in that candle.

Now price has been unable to break the 6400 level - also the volumes are low - as they were throughout the earlier Asian Session....

I'm now short...
I exited my short for a small profit - better to be flat for when The Brits start trading......another 35 pips at LO up would spoil my morning http://www.forexfactory.com/images/icons/icon11.gif
Trading Levels with WRBs
  • #2,799
  • Aug 18, 2009 2:13am Aug 18, 2009 2:13am
Target area hit.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #2,800
  • Aug 18, 2009 2:15am Aug 18, 2009 2:15am
Quoting Islander
GM HG - great analysis http://www.forexfactory.com/images/icons/icon14.gif

Might I ask whose charts you are using - I have 3 different ones open and none of my candles match yours!

Regards

Islander
No. Don't tell me that.

I use Visual Trader thru CMS just for the platform. There are some good coders on this thread, so I might finally be able to make the leap to MetaTrader. MB trading has it.
Without VSA, you're playing checkers while the Smart Money plays chess.
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