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  • #3,241
  • Sep 7, 2009 11:13am Sep 7, 2009 11:13am
Hi Zoli,
why You choosed wick of high volume bar instead of bodY as pottential S/D zone ?

Thanks.

Best,
Tom


Quoting zoli
Hi folks,

just a potential GU set up I spotted in hindsight - I know it did not make money or anything, but I am happy, I did not even spotted these in the past. Step by step in my own speed.

I put some stuff on the chart. I noted 2 potential set ups, a long and a short of which I like the short more. There is a very nice lack of demand in previous supply area. I am sure some guys took this trade.

There are a few abbreviations used by me, not necessarily correct terms, I just like them and they help me to focus and remember what I already noted....
  • #3,242
  • Sep 7, 2009 11:22am Sep 7, 2009 11:22am
Hello HiddenGap
WHY Bar Nr.4 is test bar ?
As i see volume is less than previus two and also lower high and narrow range and its up bar.
Or, if we have seen weakness in background - then we call such bars as test bars ?

Thanks.

Best,
Tom

Quoting HiddenGap
From a strictly VSA point of view, the answer is yes.

Tests fail for two reasons: 1. volume is too high (showing supply still present) 2. neither of the next two bars close higher than the close of the test candle.

Markets, however, can go up on a high volume test. The move is expected to be muted and to be re-tested.

This is what happens here. After the test , which we also note is a squat, prices rise slightly and then meander sideways. We see a few test like candles here, where a trader might look to enter.

In my opinion, #4 is the best...
  • #3,243
  • Sep 7, 2009 11:59am Sep 7, 2009 11:59am
Quoting tfflyer
Hi Zoli,
why You choosed wick of high volume bar instead of bodY as pottential S/D zone ?

Thanks.

Best,
Tom
Tom,

Thank you for your question.

yeah...on the chart that is not what HG was talking about I admit.
Also, I did not specifically highlight S/D zone, just highlighted an area where the ND happened to appear clearly and wrote that there is supply.

I tend to look for signs in the whole range of the bar usually. In this case I was happy to notice it there for this reason:
Attached Image (click to enlarge)
Click to Enlarge Name: VSA_029.gif Size: 53 KB

It is just really close to a supply line. Having said this, I know that supply ZONE is way more appropriate to think of, line is just too tight.

So, yes, you are right in saying that on the right edge S/D zone, as it was suggested by HG, is the body of the bar.

Actually I still find it difficult to look for all these terms and find them.
Kind Regards zol
  • #3,244
  • Sep 7, 2009 12:31pm Sep 7, 2009 12:31pm
Thanks for answering.


Best,
Tom

Quoting zoli
Tom,

Thank you for your question.

yeah...on the chart that is not what HG was talking about I admit.
Also, I did not specifically highlight S/D zone, just highlighted an area where the ND happened to appear clearly and wrote that there is supply.

I tend to look for signs in the whole range of the bar usually. In this case I was happy to notice it there for this reason: Attachment
It is just really close to a supply line. Having said this, I know that supply ZONE is way more appropriate to think of, line is just too tight.

So,...
  • #3,245
  • Sep 7, 2009 3:23pm Sep 7, 2009 3:23pm
This is in response to a PM I received. I am answering it here, because I think many people may benefit.

* Expansion body analysis (aka WRB analysis) is independent of both candlestick analysis and volume spread analysis. Therefore expansion body analysis can be done with OHLC bars and without regard to volume. One can define significant EBs and the resulting Supply/Demand Delta Zones thru price action alone. Expansion body analysis is a form of volatility analysis. Volatility is correlated to volume. In fact, some say volatility is better than volume and you can "see" volume in expansion bodies.

I disagree with that. So most of the ones I am concerned with have a volume component in their definition. One sub-group has climatic volume as one of its requirements.

* I spent most of yesterday watching Tradeguider webinars on the site and at Youtube. Gavin repeatedly said, "the best place to take a short is on a no demand (or low volume signal) within the range of a high volume bar".

Expansion bodies and the resulting supply/demand delta zones are a refinement of the range. The body is the O-C of a bar/candle. VSA does not look at the open.

Take a look at the chart below. This is not a great trade, but that is not the point. But I will say this about the trade itself (not taken); Time of day on a Holiday should be reason enough not to take it.

We see a wide spread up candle on high/climatic volume. We know the volume is climatic because of the color of the volume bar. This candle is an Effort to Rise. The very next candle is a reversal after an Effort to Rise. We know markets don't like high volume up candles because there could be "hidden" selling within them. This must be the case here, otherwise the next bar would not be down.

Let's skip to candle #1: prices have fallen and now begin to move back up. This candle is a narrow range up candle on volume less than the previous two candles. Note also that it is yellow (extremely low volume). This is No demand. Note that this candle is not contained by either the Supply/Demand Delta Zone nor the range of the candle itself. In either case, it does close within those areas and is close enough.

Again, According to Gavin, this is the best place to short after a sign of weakness.

However, the next candle,#2, does not close down confirming #1 as No Demand. But let's assume you were looking to go short on a breach of the low of #1. Candle #2 does not make a lower low so you are not brought into the market.

#2 is an increasing spread candle closing up and near its high on
decreasing volume that is both less than the previous two and extreme. This is No Buying Pressure. We note that we have moved "deeper" into both the range of the candle and the body(supply/demand delta zone). In this case, the supply/demand delta zone and the range are almost identical.

This is another and better low volume signal within the range of a high volume candle.

#3 is the confirmation candle as it closes down. If you looked to enter at a breach of the low of #2, this candle brings you into the market. Note also that if you were still looking for a breach of candle #1, that comes as well on candle #3.

While in this example the range (H-L) and the body (O-C) are almost identical, the point is that use of an expansion body and the resulting supply/demand delta zone is just a refinement of range.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,246
  • Sep 7, 2009 4:18pm Sep 7, 2009 4:18pm
I broke this up into two post, because some might not want to read this non-vsa stuff. I hope they don't view this as padding posts .

Obviously, there is a bit more going on with expansion bodies that result in significant changes in the supply/demand dynamic in the market. What qualifies any expansion body as significant?

As I have said before, significant expansion bodies can be identified thru price action alone, volume alone, a combination of price action and volume, and some other esoteric criteria.

Before I explain one sub-group, a word on the esoteric criteria. It is perfectly reasonable for a trader to define significant expansion bodies as the first expansion body after the hour. So the clock turns to 0300 hrs and the first expansion body after that is viewed as the significant expansion body that might create a supply/demand zone. I say might because regardless of definition something must be true about the interval prior and the interval after the expansion body.

There are much better definitions to be sure, but this could be used. The point here is that one should not get caught up in definitions used by me or someone else. There are many sub-groups and often times a significant EB (as defined by me) will also be a significant EB as defined by another.

Take a look at the chart from the my previous post.

The reasons this is a significant expansion body:

1. EB7: the body is the largest body (O-C) of the last 7 bodies.
2. It is a "buying" candle. That is, it makes a higher high than the previous candle and not a lower low.
3. The close is in the upper 80% of the candle's range.
4. The open is in the lower 20% of the candle's range.
5. The midpoint of the range (H-L) is greater than the high of the prior candle.
6. volume is climatic, as defined by better volume (greatest V*range for last 20 intervals).
7. MFI is greater than the previous interval. MFI measures v/range. This is akin to an ease of movement calculation.

8. undisclosed. This has to do with the intervals immediately prior and following the EB7. The answer is on all my charts. Take a look at any chart where there are 4 (hint) lines in the supply/demand delta zone. What do the two inner (pink or cyan) lines represent?

From a VSA point of view, the above definitions (1-7) result in Effort to rise candles. Of course, VSA does not look at the open so some don't count. For me this is defined as a climatic volume expansion body.

An Effort to rise expansion body has these rules:

1. same as above
2. same as above
3. The close is in the upper 85% of the range
4. The open is in the lower 15% of the range
5. same as above
6. Volume is increasing and greater than average.
7. Same as above
8. undisclosed (same as above)
9. the candles range is greater than the previous interval.

Notice that in this case, both sub-groups define that candle as a significant expansion body.

The opposite is true of course for a down candle. The midpoint should be lower than the low of the prior interval. and the open an close change positions. And we would be looking at a "selling" bar. So the candle should make a lower low and not a higher high.

If someone want to try and code it, there you go. PM and I will assist that way. There are a couple more Sub-groups which bring price action into play I'll give those definitions as well.

*** Now still looking at the candle from the previous post. One could define the significant EBs in relation to price action. For example one could look at a fractal pattern as part of the definiton. If the EB7 is part of that 5 candle fractal pattern it is considered signifcant. Same destination. Different road.****
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,247
  • Sep 7, 2009 4:24pm Sep 7, 2009 4:24pm
Quoting tfflyer
Hello HiddenGap
WHY Bar Nr.4 is test bar ?
As i see volume is less than previus two and also lower high and narrow range and its up bar.
Or, if we have seen weakness in background - then we call such bars as test bars ?

Thanks.

Best,
Tom
It is true that the ideal test bar will close lower than the previous bar, but it is possible for tests to close higher. The background is littered with strength, which predisposes you to look for tests rather than no demands. A no demand would be a "polar bear in Hawaii".
If you viewed it as no demand, the next bar fails to close down and confirm. The bar after that does close lower but on even less volume than 4.

It doesn't alway work out like this, but also note that 4 does not close nor trade higher than the midpoint of the privous interval.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,248
  • Sep 7, 2009 5:18pm Sep 7, 2009 5:18pm
Jebus Christimas! (Yes Jebus!) and I thought Malcolm's post were useful.... Keep up the great work HiddenGap. Amazing stuff!

I hope you all had a great weekend and holiday for those in the US. See you in the chat.
The trend always ends.
  • #3,249
  • Sep 7, 2009 7:43pm Sep 7, 2009 7:43pm
Quoting HiddenGap
I broke this up into two post, because some might not want to read this non-vsa stuff. I hope they don't view this as padding posts .

Obviously, there is a bit more going on with expansion bodies that result in significant changes in the supply/demand dynamic in the market. What qualifies any expansion body as significant?

As I have said before, significant expansion bodies can be identified thru price action alone, volume alone, a combination of price action and volume, and some other esoteric criteria.

Before I explain one sub-group, a...
great stuff HG . but what is MFI?
  • #3,250
  • Sep 7, 2009 7:44pm Sep 7, 2009 7:44pm
Quoting Shamus
Jebus Christimas! (Yes Jebus!) and I thought Malcolm's post were useful.... Keep up the great work HiddenGap. Amazing stuff!

I hope you all had a great weekend and holiday for those in the US. See you in the chat.
thx Shamus. ur thread is a successful thread.
  • #3,251
  • Sep 7, 2009 8:08pm Sep 7, 2009 8:08pm
Quoting HiddenGap
This is in response to a PM... I am answering it here, because I think many people may benefit.
....Expansion body analysis is a form of volatility analysis. Volatility is correlated to volume. In fact, some say volatility is better than volume and you can "see" volume in expansion bodies.
I disagree with that...
volatility is brought about by (either presence &/or lack of) volume, isn't it?
volatility is intertwined with volume. they cannot be separated.



Quoting rockk
great stuff HG . but what is MFI?
if he is referring to an indicator, then it it must be the Money Flow index. it's a default indicator in MT4 & others.
  • #3,252
  • Sep 7, 2009 9:20pm Sep 7, 2009 9:20pm
Quoting supremeChaos
volatility is brought about by (either presence &/or lack of) volume, isn't it?
volatility is intertwined with volume. they cannot be separated....
Many times you will see a wide and increasing spread candle on decreasing volume.

Volatility is increasing while volume is not. Therefore you can't (always) "see" volume in the range or spread of the candle.

The opposite is true. An end of a rising market will have ultra high volume but the spread will be narrow. Viewing volatility and seeing volume as a function of range, misses this type of bar.

In some ways, this is the essence of VSA.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,253
  • Sep 7, 2009 9:22pm Sep 7, 2009 9:22pm
MFI: Market Facilitation Index. It too, I would guess, is available standard in MT4.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,254
  • Sep 7, 2009 10:07pm Sep 7, 2009 10:07pm
Quoting HiddenGap
MFI: Market Facilitation Index. It too, I would guess, is available standard in MT4.
woooow!
it looks like volume. i have not used it before.
yes HG it is standard in mt4.
HG pls slow down..too much information you are giving today..hehe
still we are digesting your lessons about vsa.
we are like kids in grade one primary school.. he he
anyway its wonderful effort you are doing here.
  • #3,255
  • Sep 7, 2009 10:23pm Sep 7, 2009 10:23pm
Quoting supremeChaos
volatility is brought about by (either presence &/or lack of) volume, isn't it?
volatility is intertwined with volume. they cannot be separated.




if he is referring to an indicator, then it it must be the Money Flow index. it's a default indicator in MT4 & others.
supreme;
volatility = spread(dif. between high and low of the bar)
but volume(in forex) is the number of contracts traded during that bar.
may be HG corrects me if i am wrong.
  • #3,256
  • Sep 8, 2009 4:08am Sep 8, 2009 4:08am
Hi all,

here is a morning trade I spotted. If you look at the daily charts you could argue that it was not unsafe to take a trade like this, based on some chart pattern. Now I know VSA do not use chart patterns really.

So I knew I said that using correlation could be too much of a task, and not even important, but I could not resist to the temptation. This morning EU, AU and UC are in love.
So how could these used with VSA?

We know that EURUSD and AUDUSD positively, USDCHF negatively correlate. From these three EU and UC have better correlation. So why not examine this consolidation and place it into the picture of the mind?

Please note that it was suggested by senior members to specialize in one vehicle and I do agree with that and I thank you for that suggestion. However, to me, it feels right to study a bit different pairs to feel how these markets are inter connected. Having mentioned this I also rather study GU for the most time and I feel most familiar with that too.

Back to the charts.

On the EU chart there is a nice up bar at the end of the consolidation. Now, this can easily be a fake up move but the bar after looks like a Test. The V is higher than it would be nice, but the bar looks fine and this V is quite low for Europe to start with.

And what is the same bar on AU and UC?

AU - same problem, a bit high V, yet again it is not high for Europe Open and did not close bellow Tokyo Open price.
US - this looks like ND to me. Not perfect, but right after a selling pressure type of bar it has narrow range and it is pushed back to the middle of the spread. This is not a bar what is good enough for higher prices.

Therefore we could conclude that there is a good potential for the EU to experience lack of supply.

Following this the market rockets up on EU and AU and collapses on UC.

There is a stop in the middle of the move.
At this point we can say that AU and UC moved together nicely with EU so the correlation seems to be right this time.
What is going on with this move?

EU - a bit of supply enters and there is a clear NS bar. This is not a bad place to initiate a long position. Perhaps refinement on 5m chart is advantageous. V is clearly as low as we are happy about.

AU - Things look different a bit. A bit more down move but than there is a Hidden Test with low V. This is likely to be a valid test on 5m. Not bad at all.

UC - A lower V up bar appearers, but the spread is too high for my liking. After this a down bar, narrow spread and did not take out the high of the up bar. The V is low again, so we could wait for the next bar, which looks ok to me because it is accompanied by increased V and is pushed down like that. the Supply still in control.

Now it is nice to see how these indications arrive in different intensities. For example the NS on EU was really good, yet at the same area AU and UC were hesitating. What to do with this is up to the individual. I could imagine that a good trader could conclude that if there is a clear signal on the main market, the markets that follow it are safe to trade too. Or if all the markets provide recognizable signals at the same part of their correlated move, that is a confirmation of that signal.

Eventually taking the same trades on more than one markets could not be the best way, one may as well just take a bigger position on one market. It is rather the reading what interests me, for similar signals can be noted with different intensities, perhaps a help in deciphering this thing.

Please ignore my positions, they happen to be right but I would like to focus on the reading. Any comments, critics and help is appreciated.


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Kind Regards zol
  • #3,257
  • Sep 8, 2009 4:33am Sep 8, 2009 4:33am
Great work zoli. Thank you. keep 'em coming.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #3,258
  • Sep 8, 2009 7:02am Sep 8, 2009 7:02am
Nice analysis Zoli, Im new to VSA and EU/UC are the only two pairs I watch. You can often use them like you have done in your post to confirm each others signals.

I was wondering if you had any kind of long bias on EU before the breakout this morning? It looked quite weak in the background to me so I didnt get any of the up move. I often struggle to identify when a consolidation area is a distribution after the up move or reaccumulation for higher prices. Do you just wait for a break out to either side rather to trying to predict?
  • #3,259
  • Sep 8, 2009 9:07am Sep 8, 2009 9:07am
Quoting RyanVega
Nice analysis Zoli, Im new to VSA and EU/UC are the only two pairs I watch. You can often use them like you have done in your post to confirm each others signals.

I was wondering if you had any kind of long bias on EU before the breakout this morning? It looked quite weak in the background to me so I didnt get any of the up move. I often struggle to identify when a consolidation area is a distribution after the up move or reaccumulation for higher prices. Do you just wait for a break out to either side rather to trying to predict?
Thank you for your question Ryan.

Well I can agree with the concerns, if any, regarding the S/R zone we are consolidated to at the moment in EU and UC. I mean it is clear that there is a serious supply/demand there just by looking at the weekly and daily charts. It is choppy so it may be difficult to decide a bias/expectation, therefore how about not having any? Miss Market will tell us anyway what she wants.
Also have a look at the daily chart. If this zone was that extreme why did not the price get away from it right away; it is still pushing up against it?

I knew that the price was to either struggle there or reverse actually.

As I am typing this I remember that some guys shorted EU at 1.4440 - I hope they are out with a nice scalp by now.
I did not do that because the chart was still up and I do not feel confident and have no experience to pick which is the market top. I do not think I will ever do that either.

To set the mind to a direction can lead ultimately to miss out trades - happens to me - or worst (that happens to me too); so I find it important not to do that, it tricks me all the time if I do.

Consolidations.

Unless there are CLEAR VSA signals for either side, either in the far background or within the consolidation, I struggle to decide which way, so I may as well wait. When I see a VSA signal looking thing, until it is confirmed I like to use the words potential or provisional with it.

By clear signs I mean:

beginning of consolidation - BC or SC, Stopping V, Reversals etc...
end of consolidation - Test , NS or UT, ND

These come in different intensity and could not be that easy to figure out because there can be several low V bars after some climactic action and these can be up or down especially on lower TF.
I also note that you mention that after a bigger move you may look for a consolidation and a move to the opposite direction and not a continuation.

Yes...this is not that easy. And that is, why I try to wait to the move to start. If there is a move in place we can identify all the background signs as appropriate, because we know the result already. It is not important to pick bottoms/tops, I think, and rather wrong if you are not sure about it. I do not think it is important to pick the whole move either. I mean these markets generate millions of pips without you even be able to pull the trigger. Whilst you are sleeping for example. A scalp on a daily chart looks a great move on the 5m, but may look pathetic on weekly. So is it a big trade or a tiny?

Admittedly, it is difficult sometimes to get a good ND entry once the collapse is in place, may just bottom without any narrow up bar. The same may not be true for an up move, there are usually more opportunities.

Eventually you can identify these set ups in the right time, perhaps you will know the move before it starts and so on. That is why you, and I and many, need practice and patience and practice.

And have a look at posts of Malcolmb, HiddenGap, Shamus, Supremechaos , Yuppie and many other guys really know what this is about. They know the know how Come to the chat too, guys can help you out there.

I also recommend you to read the "The three skills of top trading" from Hank Pruden, he is giving some ideas about schematics of Accumulation and Distribution by Wyckoff. He also has something to say about re-accumulation and re-distribution.

Sorry for this way too long post..it seems that I am not busy....it is going in to my diary so I can read it after a year.
Kind Regards zol
  • #3,260
  • Sep 8, 2009 9:39am Sep 8, 2009 9:39am
Just a not so quality set up on the USDCAD pair.

Not so clear and the risk to reward is potentially low. The place where I could have traded (was not looking at it when it was the action) is after the down bar, because my red line (sorry I just do not have diamonds.. ) and the chart is curving up.

Could anyone help me out with the test bars here please? They are not so easy to spot and they follow two weakish bars, two up bars on higher V but closing on the lows.

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Kind Regards zol
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