vsa with Malcolm

Something's been brewing for a while now.

Dollar comeback after 30 odd years in the slump?

Where is the volume on Dollar index to sustain a break out ?
Euro/USd retraced the entire range with one bar but...

For those in search of the holy grail, I think I found the perfect system for you.
http://www.jurikres.com/snake/main_oil.htm#productname

Don't get fooled by those volumes, the volumes went up in the last years in every asset, as a consequence of more capital in the financial markets. Anyway, USD Index seems to be in accumulation phase.

Thoroughly enjoyed the read.
So True...
:-)

The country is called China, and they have lots of money to spend.

Not only

S&P-500 and dow looks like its going to tank today.

Cmon guys lets rebirth this thread!

Here is an Article I wrote about Wyckoff, VSA and Financial behaviour in the Markets.

http://www.dukascopy.com/fxcomm/fx-a...on=read&id=979

SM killed this thread and VSA. You did not get the memo?

xDDDDD

I'm having a bit of a rebirth myself, so I will attempt to get things started.

I want to go back to the beginning with this post. That is to say, I want to start with a couple of core VSA concepts.

1. Volume + Spread + Price = Truth.

This concept will be addressed as we look at the intervals in the chart.

2. When strength (buying) appears, it usually appears on down bars.

The Big Boys (BBs) have to buy when price is falling. This is because they are buying in size and they do not want to bid the price up against themselves. Therefore they need to buy when price is going down. Of course, there are exceptions, but let's focus on the rule first.

Take a look at the chart below.

I must first say that no "entry" is shown (although it should be obvious to some). This post it to get us to think as the BBs think. Not to show a text book entry.

A. Notice that we have a wider spread (range) down bar that closes off its low with the next bar down. Not also that the volume is both increasing and above average. In fact, the volume is into the area that denotes it as being more than a couple standard deviations from the norm.

But let's think about this for a second. If all this volume was selling, then the bar should close on the low. It does not. Moreover, if all the volume and price action represented selling then the next bar should not be up. And yet it is. These things can only mean that there must have been some buying on this bar.

B. We have a similar situation here as with A. There are a couple of differences to note. The volume is not as high here. This tells us that the BBs, while still active, are not as active here as they were on A. However, volume is above average so we know that the BBs are active to some degree. Again, what we have here is a down bar on increasing volume that closes off its low with the next bar up. There must be "hidden" buying on this bar for it to close off the low and for the next bar to be up.

C. The first thing to note here is that the close is just off the middle of the range. Closing in the middle of the range is a tip off. Next take a look at the range and the volume. Volume is increasing and above average. Note also that it is greater than the volume at B. Whilst the volume is greater than B, the range here is smaller than B. Why would that be? It must mean that something (demand) is compressing the range. In fact, every sell order is immediately matched with a buy order. This keeps the range narrow. If you were looking to get short, you would be getting what appears to be a good price since the range is narrow. In truth, the narrow range is telling you the true intent of the Smart Money.

If the Smart Money was bearish, then the range would be increasing and your fill would not be as good. But the range is kept narrow as the Smart Money takes every opportunity to gobble up all sell orders.

D. Stopping Volume. Volume is ultra high so we know that the BBs are active. The BBs cannot hide their activity. The close is down from the previous close, and in the middle of the range. And the next interval is up. But let's forget about the next interval for a second. Can this interval be bearish with all that volume, a down close, and a close well of its low? The close off the low tells us that buyers had to step in, otherwise the close would be at the low.

We know that 1-2 lot traders are not moving the market. Therefore it must have been the BBs that drove price off the low. That would mean they were buying not selling.

E. Test. Before price can rise the BBs need to make sure that all the supply (selling) is gone. The way to do that is to "test". Price is marked down first then marked back up if no sellers appear to keep price down. But again, let's go back to the theme. This "test" is done on a down bar. If this was a weak bar as the down close would seem to indicate, then why is the close near the high rather than the low? In this case, the volume is increasing instead of decreasing, but it is still a sign of strength.

F. No Supply. Take a look at the small range we have here. Note also the small amount of volume. Both the range and the volume are telling us that the BBs are not active on this interval. If price is falling as the BBs are not active, that must mean they are not interested in lower prices. If they are not interested in lower prices, then they must be interested in higher prices.

G. The close in the middle is the key here. What is different is the fact that volume is decreasing on this interval. At the very least that tells us that the BBs are not actively selling the market on this interval. If they were, then the volume would be increasing. Then again, the close would not be in the middle either. And of course, we are dealing with a down close. But it does not appear that this would be weakness does it?

H. This is a Squat. Notice that the volume is greater than the previous interval but the range is smaller. So we have more BB activity but a smaller range. We have already talked about that. The range is being compressed because of the amount of buy orders underneath price.

Every interval tells a story. That does not mean one can get long or short based on one interval, however. Background matters.

But this post was just about getting a couple of basic principles under our belt.

EURCHF has "Telegram" written all over the chart!!!

Nice post Hidden Gap, don't let the lack of replies fool you into thinking your post is not greatly appreciated. I look forward to any further instalments!

Thanks Hidden Gap for that good post. Best Wishes to All.

Great as always HG.

HG, what re-birth are you having ?

Are you not sticking with Price Action, WRB, HiddenGap Zones, Supply & Demand Zones, and VSA ?

Your above post has Excellent Details as always.

We spoke about the principle that when strength appears, it usually appears on a down bar. The opposite is also true. And that would be, when weakness appears it usually appears on an up bar.

In fact, VSA teaches us that markets do not like high volume up bars. The reason being is that they can contain "Hidden" selling.

However there is a very important instance when a wide spread high volume up bar means strenght. That instance is called "Pushing thru Supply".

In the market(s), higher prices are often blocked by a variety of traders who already hold poor positions and want to sell. On the first chart below, we can see that the top to the left represents a place where many traders got long. All these traders want now is to get out at break even. Therefore as price moves back into the area of this top, there will be rash of traders that want to sell (supply).

So what can the Smart Money do?

A wide spread up bar is the answer. The wide spread up bar is not designed to keep traders out, but rather keep traders in. Nevertheless, there will be taders attempting to sell. The Smart Money must be willing to absorb the selling and that is why we see high volume on the interval. This is called absorption volume.

Going back to the first chart, A. is our wide spread up bar that is pushing thru supply. The volume is high denoting absorption volume. This is a sign of strength and if we see low volume down bars or any testing after this event, it is a very strong buy signal.

B. Whilst this is a down bar after the wide spread up bar on high volume, it is not a sign of weakness. Take a look at the range of this interval. Now look at the volume on this interval. Notice that is slightly less than the previous interval's volume. But the previous interval was the ultra wide spread. Now volume has slightly deminished yet the range if this interval is much smaller. Since the volume is decreasing, we would not call this interval a squat. However, it is clear that the ratio of volume to range is out of wack.

C. This is a "Hidden" Test. What makes this test "Hidden" goes back to my previous post. Strength appears on down bars. In this instance, our test comes on an up bar rather than a down bar. Therefore we call it "Hidden".

Let's look at a couple of features of this interval. It is marked down and makes a lower low than the previous interval than closes up near its high on volume less than the previous two intervals. The mark down is designed to bring out any sellers. Since the sellers do not show up, price is then marked up to close near the high. Again, the volume is less than the previous two, but we can see that it is still pretty high.

D. First, this interval closes down slightly from the previous interval. Thus, our "Hidden" Test fails. Volume increases on this interval and the close is in the middle of the range. This tells us there is some strength on this interval. The fact that it makes a higher high and then closes off the high shows some weakness, however.

So if this interval is not completely clear, what is the best thing for the smart money to do?

E. Test. Not only is volume less than the previous two intervals, it is now less than average and less than all the intervals in this sequence (A-E). Again, we see that the interval closes down from the previous interval, makes a lower low than the previous interval and closes near its high. That is the ideal action we want to see on a test.

Chart two is the result.

Thank you , yet again , H.G. for your post....any perspective from you is always insightful and appreciated....best regards, john

AudUsd printed an upthrust bar on Friday. Tick volume was lower than that of the Aug 9 upthrust.