vsa with Malcolm

For those who attend the TradeGuider futures trading room, this set up is often mentioned. For those who don't, this set up comes directly off the pages of the VSA Bible- Master the Markets.

Set up: The gapped down shake out.

Take a look at the chart below.

Not only is the gap down followed by a shake out a good place to get long itself, it defines the background as strong for later entries like the No Supply.

I've a question about this HG, the highest volume on your chart appears on an up bar (ok, maybe an even close), closing near the lows, it's basically a high volume upthrust. This would make me think twice about going long at least until we came back to test this area from above.

Clearly we can see it did go long, I don't really consider that high volume bar to be absorbing at that point. Interested to see what you have to say about it really!

Did you view it as weakness?

If so, is it only temporary?

How can we tell it's only temporary?

Cheers,

Liam

Not HG but I will offer my 2 cents...

What is the result of the UHV, UT type bar?

Every single downbar was lack luster at best and showed 0 SM selling. Every downbar after that bar was either a NSP or a NS. We do see some activity / volume increases on the upbars with a beauty SO type bar 3 bars after the UT / UHV bar.

Before I answer the questions, I have to say something. The last two posts were written by very respectable VSAers and we all should be thankful that they have taken the time to post here. They have much value to offer. If people cannot see that, well shame on them.

A thread does not survive simply by having a lot of posts. It's the quality of the posts and the posters themselves that give life to a thread. I hope the last two posts were the first of many to come.

Okay, let's get to it.

I actually wanted to try and stick to VSA as much as possible until the thread got going again. Unfortunately, I can't answer these questions without getting into some other stuff.

"Did you view it as weakness?':

Absolutely. Seeing this Ultra High Volume up(or even) bar that closes well off its highs screams weakness. It is indeed an Upthrust.

"If so, is it only temporary?":

Clearly it is after the fact, but let's back up and go over my thought process at the time.

Two intervals prior to this UpThrust, there is a possible Effort to Rise interval. While VSA talks about Effort vs. Result and Effort to Rise/Fall intervals, my definition is different. The reason I say possible, is because to be an Effort to Rise interval by my definition the interval in question must produce a Hidden Gap. Therefore you do not know you have an Effort to Rise until the next interval.

As soon as the next interval closes and I can see that the low of this interval is not lower or equal to the high of the interval prior to the possible Effort to Rise interval, I know I have a true Effort to Rise interval. Because it is a true Effort to Rise it is also what I call a "market structure". Again I do not want to get into that at this time. However, knowing that I have a structure that is an Effort to Rise, I can move my stop to just below the low of this structure.

Then we get the Upthrust.

All structures are changes in the Supply/Demand Dynamic, but not all changes are Key changes. In other words, not all structures are going to create Supply/Demand Delta Zones. There are a couple of ways we know that a zone has been created in this case. First, we have two consecutive up bars that make higher highs and not lower lows after our Effort bar (this is result/follow through) prior to the hidden gap being filled and prior to the next swing. Second, we observe that there is a full interval (range) above the high of the Effort interval.

Therefore, the appearance of the Upthrust actually confirms that there is a Supply/Demand Delta Zone just below. Well, if the zone was made by buying aggression (Effort to Rise), then it is by definition a Demand Zone. And if it is a Demand Zone, I am only going to be looking to get long within it.

"How can we tell it's only temporary?":

Despite seeing this obvious weakness, we know there are only three options.

1. Price will fall thru the Demand zone. If price falls and does not respect the Zone, we have our stop in place.
2. Price can fall into the Demand zone and bounce. This is nice but we need an actual trade signal to enter.
3. Price can fall into the Demand zone and give us an entry signal to jump on board.

The first two intervals after the Upthrust are down intervals on decreasing volume. In fact, both come on volume less than the previous two intervals. Because the range of the first interval narrows, I would call this one No Supply. The range of the second one widens and closes near its low, so I would call it No Selling Pressure. If there was true weakness in the market due to the Upthrust, then volume should not be going down on down bars.
But we need to see something happen on or in the zone. A few intervals later, we see a test. This test actually fails as the next interval is down. However, the next interval is down on even less volume and is No Supply.

So price has fallen back into an area where there was dominated by buyers and we see an interval that has no sellers. The weakness must have been temporary.

Two excellent replies, thank you!

Seeing as HG was kind enough to heap praise on myself and Pres, I feel I must mention to those reading that both Pres and HG have been great mentors to me. I've learned (stolen!) loads from them. Well worth paying attention to if you want to improve your trading.

Read through their posts on this thread. If you can't take the time to do that, you're not cut out to be a trader, I promise you, you won't regret doing it.

So can they push through supply ? - Umm , I doubt it ..

Will monitor and close ..

..............

Forget Weekend Gaps , here we have a True Gap ( Open higher than Previous bar close - Heavy buy orders )

k...........

Nice weekend , Empty Room ..lol

Thanks for the great charts.

How many time frames are you using to get your zones?

I like this short video. It's good inspiration.

Well .. It's a bit of a headache , Really .. I normally have to breakdown each individual Candle I want to MARK ( Candles close to the Lows or Highs )..

Take for example , A 4 hr Candle breakdown ..

Had to go all the way down to the 5 min chart to Find what I was looking for - Accumulation ...

Nice chart. Very interesting.

I am constantly amazed by the fact that traders using different concepts and ideas can come to the same conclusions. The names change, but the underlying truth still shines through.

After seeing your post, I took a look at a 5 minute chart. Looking at nothing but a 5 min, which is just my personal preference-1 time frame analysis, I was pleased to see I could have made the same trade.

Obviously, the area you marked accumulation should still be there. But I could only get long if it was happening within a Supply/Demand Delta Zone. Not just any Supply/Demand Zone but one created from buying aggression. This buying aggression (Effort to Rise) by definition would mean the zone was Demand. And as such, I would only be looking to get long within it.

I guess the point would be that we don't need to get bogged down in particular bar names or anything else. Grasping the underlying truth of what a bar means matters far more than what any one person wants to call it. Of course, this also translates to Zones........

Best day ever !!!

I don't even want to refresh my screen .

If Intel is back, this thread is a better place. At least we know you're out there my friend.

now we are in business !!!

Glad I droped by to see what the old gang is doing !

Haha, nice one, it's been a long time!

You guys flatter me so.
I have been dropping by every so often. It's good to see you guys back and posting again. There's always a lot I can learn.

..How do you Mark your Supply/Demand Delta Zone ..?

I'm expecting a bounce off the 8hr demand Zone . Still bearish on the Pair , so I'll Probably use it to take another SHORT ...

Quick scalp towards demand - And If 8 hr demand doesn't hold , all the better ..

Nite ..

^^