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Trade Using VSA (Volume Spread Analysis)

  • #6,681
  • Apr 13, 2010 3:34am Apr 13, 2010 3:34am
Wide spread up bar on lowering volume = weakness
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  • #6,682
  • Apr 13, 2010 3:41am Apr 13, 2010 3:41am
update on my previous GU post:
ref: http://www.forexfactory.com/showpost...postcount=6675

GU hit the 23.6% retracement level as expected (of point AB), with strong pickup of strength & test with shakeout(see 15m also)

Price could be looking upwards from now.

EDIT: I forgot to mentioned about a critical UK trade balance News release prior to shakeout.
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TP (max) estimate is within ADR.
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  • #6,683
  • Apr 13, 2010 4:19am Apr 13, 2010 4:19am
LOL.....the news was released in the wide ranged candle with the yellow arrow - also the highest volume of the morning - but just look at the 2 previous candles and their volumes......a nice 50 pips for those on the inside track and not too difficult for the nimble trader to hitch a ride too....http://cdn.forexfactory.com/images/icons/icon12.gif
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Trading Levels with WRBs
  • #6,684
  • Apr 13, 2010 4:20am Apr 13, 2010 4:20am
Quoting Intel
Wide spread up bar on lowering volume = weakness
Nice looking charts.

The two bar up thrust you labeled is in the wrong place. If that was appearing at the same level where you drew the down trend line, then you would really have something.

Also that no demand bar is one of the "Ugly" ones. It closes higher but makes a lower low than the previous bar. Making a lower low and then closing off of it is a sign of strength. The fact that the next bar is up confirms this. This is more like a hidden test. Which makes sense as they would be testing the supply underneath the trend line (support).
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #6,685
  • Apr 13, 2010 4:39am Apr 13, 2010 4:39am
Can anybody share his/her ideas about eur/usd? Is it accumulation or distribution currently?
  • #6,686
  • Apr 13, 2010 4:51am Apr 13, 2010 4:51am
Quoting polomine
Can anybody share his/her ideas about eur/usd? Is it accumulation or distribution currently?
Hi I hope this helps (just my quik & dirty take)

Do take note of retracements level, it help us to anticipate potential "Activities" at those levels. (the buck goto stop somewhere, rite? )

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  • #6,687
  • Apr 13, 2010 5:06am Apr 13, 2010 5:06am
Hey, I remember according to MTM, we can analyze the price action at top/bottom of the range to tell if it is distribution or accumulation. I think this is the most difficult part of VSA, when the price goes sideway. Perhaps we have to wait for the breakout, and we'd better do nothing.

Quoting lascavel
Hi I hope this helps (just my quik & dirty take)

Do take note of retracements level, it help us to anticipate potential "Activities" at those levels. (the buck goto stop somewhere, rite? )

Attachment
  • #6,688
  • Apr 13, 2010 5:19am Apr 13, 2010 5:19am
quik update on GU from my previous post ref:[IMG]file:///C:/DOCUME%7E1/lascavel/LOCALS%7E1/Temp/moz-screenshot-3.png[/IMG]http://www.forexfactory.com/showpost.php?p=3633257&postcount=6683

Increase demand appears....

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  • #6,689
  • Apr 13, 2010 5:22am Apr 13, 2010 5:22am
Quoting polomine
Hey, I remember according to MTM, we can analyze the price action at top/bottom of the range to tell if it is distribution or accumulation. I think this is the most difficult part of VSA, when the price goes sideway. Perhaps we have to wait for the breakout, and we'd better do nothing.
Not really, MTM probably referring to mkt extreme. That is why using fibo levels helps you in this respect when price is consolidated after a previous rally.
  • #6,690
  • Apr 13, 2010 5:27am Apr 13, 2010 5:27am
Quoting asgard2
I am a data comms engineer by profession myself and at uni I did pure and applied math so we are on the same side of this equation.



Yes it matters and I will try an make it clearer for everyone.

Williams says that traders don't sleep. Even if that is right, the Central Banks sleep who are providing the forex liquidity unlike a share market.

You cannot take something as just gospel because someone said it. Most Especially when their credentials are supplied via self recommendation.

Now say, I am running a Central bank and;.

I...
what a wonderful explanation... everything seems more clear now... thats i was looking for.. thanks asgard
  • #6,691
  • Apr 13, 2010 5:39am Apr 13, 2010 5:39am
I'm not a VSA expert by any means, so most of the time I don't know what I'm looking at but this looks a lot like a selling climax to me... what do you VSA Connoisseurs think?

-SK-


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  • #6,692
  • Apr 13, 2010 6:26am Apr 13, 2010 6:26am
Well... I just reread the definition of a selling climax in MTM and it doesn't sound like what I'm seeing so...

----------------------------------------------------------------------------------
The Selling Climax

Brief Definition: An imbalance of supply and demand causing a bear market to transform into a bull
market.

Explanation: This is the exact opposite of a buying climax. The volume will be extremely high on
down-moves, accompanied by narrow spreads, with the price entering fresh low ground.
The only difference is that on the lows, just before the market begins to turn, the price
will be seen to close in the middle or low of the bar.

To create this phenomenon requires a huge amount of selling, such as that witnessed
following the tragic events of the terrorist attacks on the World Trade Centre in New
York on September the 11th 2001.

-----------------------------------------------------------------------------------

It says that a selling climax has narrow spreads, but the down move that we just had was on wide spreads. hmm...

Interesting to note, that since I took the screen shot of E/U, price has reversed just about the whole move down...

Whatever it was... there was lots of demand at 1.3555 -> 70

-SK-
  • #6,693
  • Apr 13, 2010 6:48am Apr 13, 2010 6:48am
For those who are interested in what EURUSD "activities", here is my take for now.

Price could still consolidate further down & i would prefer to see some more pickup of strength at those retracement levels. any weak demand could be views as market may be looking for a better price downwards to accumulate further.

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  • #6,694
  • Apr 13, 2010 7:53am Apr 13, 2010 7:53am
Thank you for clarification.

Yes, I noticed you are an expert of fibo besides vsa. And I remember Hidden Gap once mentioned that analysis starts from climax activity.

Thank you again and HG also.

Quoting lascavel
Not really, MTM probably referring to mkt extreme. That is why using fibo levels helps you in this respect when price is consolidated after a previous rally.
  • #6,695
  • Apr 13, 2010 8:08am Apr 13, 2010 8:08am
update on EURUSD post ref: http://www.forexfactory.com/showpost...postcount=6694

more signs of strengths appears again...

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  • #6,696
  • Apr 13, 2010 8:15am Apr 13, 2010 8:15am
Quoting polomine
Thank you for clarification.

Yes, I noticed you are an expert of fibo besides vsa. And I remember Hidden Gap once mentioned that analysis starts from climax activity.

Thank you again and HG also.
oh no, not really an expert. Just sharing & learning at the same time.

My expertise is actually in equities but VSA in forex is a whole different animal altogether.

anyway hope you find it useful.
  • #6,697
  • Apr 13, 2010 9:04am Apr 13, 2010 9:04am
Quoting lascavel
update on EURUSD post ref: http://www.forexfactory.com/showpost...postcount=6694

more signs of strengths appears again...

Attachment
I just been advise by a friend(who after seeing my post on EURUSD) & he who uses Tradeguider that he is seeing a lot of red arrows (weakness triggers) instead which is completely opposite of my analysis.

In any-case i stand corrected as i am here to learn & make mistakes too & learn from it.

any comments, corrections & criticisms is most welcome.

Cheers!
  • #6,698
  • Apr 13, 2010 9:15am Apr 13, 2010 9:15am
Quoting asgard2
I am a data comms engineer by profession myself and at uni I did pure and applied math so we are on the same side of this equation.



Yes it matters and I will try an make it clearer for everyone.

Williams says that traders don't sleep. Even if that is right, the Central Banks sleep who are providing the forex liquidity unlike a share market.

You cannot take something as just gospel because someone said it. Most Especially when their credentials are supplied via self recommendation.
Can you supply an open/close time for every central bank in the world and show me when all of them are "sleeping"? I am guessing it's only on Saturday and Sunday. LOL Just kidding

PS Hi everyone. I hope all is well.
The trend always ends.
  • #6,699
  • Apr 13, 2010 9:23am Apr 13, 2010 9:23am
Quoting SilverKnight
Well... I just reread the definition of a selling climax in MTM and it doesn't sound like what I'm seeing so...

----------------------------------------------------------------------------------
The Selling Climax

Brief Definition: An imbalance of supply and demand causing a bear market to transform into a bull
market.

Explanation:...
Narrowing spreads accompanied by low volume during a trending move almost always signal weakness in that direction and a reverse position should be taken.

EU looks weak on Globex H1 EU if it crosses the green line of death (so far it's been struggling with it) it should be a nice ride down. If it holds I would take the sideline or a nice JPY trade.
The trend always ends.
  • #6,700
  • Apr 13, 2010 9:35am Apr 13, 2010 9:35am
Quoting Shamus
EU looks weak on Globex H1 EU if it crosses the green line of death (so far it's been struggling with it) it should be a nice ride down. If it holds I would take the sideline or a nice JPY trade.

Thanks for the explanation mate! I seem to have a few things wrapped the wrong way in my head! ... That helped...

-SK-
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