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  • #23,561
  • Dec 30, 2012 10:37pm Dec 30, 2012 10:37pm
Quoting pres78
Bar 5. J. Shake Out - this is everything we want a SO to be... Page 168 if you want to read the full definition. We all know the panic this bar created. Those already long most likely got stopped or had to cover, those that saw that bar take off down after three previous downbars and jumped on the moving train and shorted the market would have been very upset when that bar ended up closing on the highs... most of them would have been stopped out on this very bar or the next one. (This also technically speaking completes one hell of...
Hi Pres78,

I could not find anything about SO on Page168 neither on Post168?

thanks,
LOT
  • #23,562
  • Dec 30, 2012 11:41pm Dec 30, 2012 11:41pm
Quoting LO-Trader
Hi Pres78,

I could not find anything about SO on Page168 neither on Post168?

thanks,
LOT
He is referring to the VSA bible, Master the Markets by Tom Williams. And the page is actually 167.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,563
  • Dec 31, 2012 2:11am Dec 31, 2012 2:11am
Quoting pres78
HG you sneaky bastard 16 bar labels and only 9 marked on your chart... well, well, well aren't we raising the test bar up quite high. Is this this end of year exam?

  1. E. Climatic Action , WIDE SPREAD DOWN BAR CLOSING OFF THE LOW WITH HIGH/VERY HIGH VOLUME
  2. K. Potential Selling Climax -WIDE DOWN BAR CLOSING OFF LOWS WITH UH VOLUME
  3. B. Demand Swamping Supply (DSS) UPBAR IN A DOWN TREND CLOSING ABOVE PREV 2 DOWN BARS BARS & HIGHER THAN AVG VOL
  4. M. No Selling Pressure-LOW VOL THAN AVG DOWN BAR CLOSING NEAR HIGH
  5. J. Shake Out.WIDE UP BAR CLOSING AT/NEAR HIGH& VOL IS HIGH-THE LOW IS LOWER THAN PREV 4 BARS
  6. I. Supply Coming in-VOL IS HIGHER THAN#5 CLOSING NEAR MIDDLE SO EXTRA VOL CAN ONLY BE SUPPLY COMING IN
  7. O. Test -TESTING FOR SUPPLY SEEN AT#6 NARROW RANGE CLOSING NEAR HIGH-(THE NEXT BAR IS NO DEMAND)
  8. G. Up Thrust -IN UPTREND WITH HIGH HIGHER THAN PREV BAR CLOSING AT LOW AND VOL IS HIGH
  9. C. Basic Test- NOT SURE OF THIS ANSWER DIFFICULT TO ANALYSE BUT ITS TESTING AFTER UPTHURST
  10. HAPPY NEW YEAR TO ALL ON THE FORUM & PROSPEROUS TRADING!!

  • #23,564
  • Dec 31, 2012 3:14am Dec 31, 2012 3:14am
Quoting Intel
It's probably not a good idea to tell us all that everything we do is wrong because 'volume cannot work with the Forex', and then turn around and ask us for our help!!
..........and all with your first ever post!

BTW, in your example, Ask is 20% less than Bid, not 25%.
ok, INTEL, thank you for your interesting answer, and your accurate calculations.

And now, could anyone give opinions about my BID / ASK approach?
  • #23,565
  • Dec 31, 2012 5:11am Dec 31, 2012 5:11am
Quoting HiddenGap
He is referring to the VSA bible, Master the Markets by Tom Williams. And the page is actually 167.
OOPS!!! Page 168 of my PDF, but yes page 167 of the actual book not including the cover (man I'm a dumbass!)
Today's zone = Tomorrow's opportunity!
  • #23,566
  • Dec 31, 2012 5:15am Dec 31, 2012 5:15am
Quoting javieritvs
Ok, guys, I have been reading this interesting thread. Thanks to Malcom and all other participants.
I have been studying different aspects of volumen issue.
You did not read that far into the thread, all of your questions have already been addressed.

Quoting javieritvs
1) FOREX is an OTC market. There are dark pools, HTF sistems, etc. Therefore, volume is not reliable (imho).
Your thinking is backwards.. Dark pools they delay volume reporting or hide it completely. Dark pools are an issue for reported volume IE stock market. Dark pools can not effect tick volume at all. I will explain why under your 2nd comment/question. HTF systems? Do you mean High Frequency Trading? (HFT) If you do I do not see how often trades are being made has to do with VSA, if anything HFT in a ranging market with VSA and S/R is almost printing money.

Quoting javieritvs
2) FOREX volume is TICK VOLUME. It means that 1 tick = 1 transaction. So in FOREX MARKET, 1 tick of 1 million dollars means the same than 1 tick of 1000 dollars.
And that is a dangerous approaching to tape reading.
Once again you have it backwards, tick volume 1 pip movement = 1 tick, price moves up one 1 pip equals 1 tick volume price moves back down 1 pip equals 2 tick volume. Do you think that 1 million dollar transaction will move the market the same amount of pips as a 1 thousand dollar transaction?

Quoting javieritvs
3) I have discovered some brokers, like Dukascopy, who represents BID chart and you have the option to read ASK chart.
It is interesting. BID volume (corresponding to BID chart) is frequently DIFFERENT to ASK volume (corresponding to ASK chart). Obviously it is, because there are BID ticks and separately, ASK ticks, as we can see if we take a look to a LEVEL II (price ladder) and watch real time transactions.
I am not even sure where to start on this.
Going back to the first thing I said in this post, you did not get very far in reading this thread, or reading the book Master the Markets. VSA is about supply and demand. Having an order come in as ask does not necessarily mean that it buying, or vice versa with bid. If I am short then I cover my position, the order to exit my postion does not represent demand or any actual buying. The whole point of VSA is to chase the coat tails of larger traders, when they buy (not covering their short positions) we buy, when they sell we sell.
Quoting javieritvs
4) I have compared Dukascopy BID chart (as an example), with different MT4 and other platform charts, discovering that price chart we can see is really BID price, AND volume we can see is really BID volume (depending each broker data). Volume reading variations are notorious, if you compare different broker data, but important point is:

YOU CAN READ BID VOLUME. NOT ASK VOLUME AT ALL.

VSA is an ingenious way to approach market activity based on volume and price. But I suspect volume reading is quite manipulated in the chart.

So I have an idea,...
As for the rest of this, same as above, comparing ask/bid will not work because just by doing that you would not know which volume is actually supply and demand and which is covering positions. You will probably retort that yes technically covering a short position is essentially buying and price will rise, which it will rise, but if the trading institutions have been distributing a pair for days or weeks and price takes a dive and you see a surge of asking volume come in from position covering, it would be very risky to buy, as price will not be able to go very far as the professionals have flooded with market with supply.

Here is a chart, EU was accumulated from 11/7-11/13, on 11/14 we find supply at resistance, not exactly a time you should be looking to short.
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  • #23,567
  • Dec 31, 2012 6:10am Dec 31, 2012 6:10am
Quoting pres78
Bar 5. J. Shake Out - this is everything we want a SO to be... Page 168 if you want to read the full definition. We all know the panic this bar created. Those already long most likely got stopped or had to cover, those that saw that bar take off down after three previous downbars and jumped on the moving train and shorted the market would have been very upset when that bar ended up closing on the highs... most of them would have been stopped out on this very bar or the next one.
I realized after my post that I missed something very cool that I wanted to show everyone. We all know the market works on supply and demand and based on this very simple premis if we know where the supply and demand was we will know where it most likely will be again in the future.

HG's chart shows this perfectly.

What do we know leading up to bar # 5?

We know that bar 3 was overtaken by supply causing a sideways market on 3 decreasing volume bars making no progress (bearish) and then then we get bar 3a as the final selloff and ultimate support. I hope everyone knows why support at 3165 makes sense based on the past 10 or so trading days... This is important, in fact look today's PA that is happening right now we have once again picked up demand at the 3180-3160 support zone.

Back to the point of this post...

As I said bar 3 was overtaken by supply causing a sideways market on 3 decreasing volume bars making no progress (bearish) and then then we get bar 3a as the final selloff and ultimate support. We worked our way back up to the area where supply was and saw a failed effort to rise followed by 3 downbars on varying volume. Now what we don't know yet is whether SM are willing to absorb / wipe out this supply for higher prices or will we fall back down towards the low?

What we do know is that we are seeing based on volume and bar prints / closes that SM are supporting the market at the high of bar 3a which is roughly the close of bar 3. This is bullish but we also know that there is still supply... So we know that bar 3 had supply but bar 3a had demand.

Once we see bar 5 print we know that SM are in fact interested in higher prices as we just watched them SO the market. It didn't take them long to take the market up 40+ pips after that SO as the supply was removed and the path was now clear... SM take the path of least resistance but aren't afraid to flex a little muscle to clear the path either. They are the markets bouncer.
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Today's zone = Tomorrow's opportunity!
  • #23,568
  • Dec 31, 2012 6:37am Dec 31, 2012 6:37am
Quoting HiddenGap
Okay, we had some fun the last time we did this so let's try it again.

This time, each answer has two parts. The first part is the name. The second part is the "justification".

For example, if you see bar 1 as a Squat. The second part of your answer would explain what you consider a Squat to be. " This is a down bar on increasing volume, especially volume greater than average. The range is less than the previous interval. The close is in the middle or upper portion of the range. The interval makes a lower low. As an added bonus, the...
1 - Climactic action + Supply swamping demand - wide spread down closing off the low on ultra high volume gives us the climactic action bar. The fact that it is pushing down through the Tokyo channel support tells us that supply is swamping demand.

2 - Climactic action + Potential selling climax - wide spread down closing off the low on ultra high volume gives us the climactic action bar. This is recogniseable as a selling climax (potential) due to it's position compared to the background. We appear to be in recent new lows. Had we been approaching a support level, this would still be valid but, we need to see how the market reacts to this bar before we can say whether it is a selling climax or a supply swamping demand style bar as above.

3 - This bar is more puzzling. Pres has it as a Supply swamping demand bar. I dissagree with this but only with the degree that supply is winning the battle. It shows that supply is winning but, there's nothing about the bar that says supply is SWAMPING demand. For me it just says that the market isn't ready to go up quite yet.

4 - Basic test - narrow to medium spread down bar, closing towards the high on average volume. This bar should make a new low. The only real difference between this and a test is that, the volume is a little higher and can look very close to being a failed test. Also, these are often used to simply check if there is any supply still about. We can see by the volume that there is some but not a huge amount. SM may decide to take advantage of this later.

5 - Shake out + demand swamping supply - wide spread down bar closing on the high on high volume. This is an up bar which actulally makes it a HIDDEN shake out. This is a mark down in price to fool the herd into selling. Once SM are happy that they have absorbed all the supply they will sharply mark the price back up again to lock in the herd. Shake outs are not always a 'demand swamping supply' bar. We are in an up trend (just) so there isn't a huge amount of supply to be 'swamped', but this case is a little different. Look where SM have marked the price down to.....our earlier Basic test. Remember we said that the volume was a little high. SM have come back to see off the herd and make some more money out of them! So in this case there is supply about, the SM hit it and swamped it!

6 - Supply coming in - wide spread up bar closing in the middle on high volume. Some of that volume has to be selling or it would have closed near the high.

7 - Test - narrow to medium (narrow is better) spread down bar, closing towards the high on low volume. Here SM are testing the supply found on the previous bar.

8 - Up thrust + supply swamping demand - wide spread up bar closing on the low on high volume. This is a down bar which actulally makes it a HIDDEN up thrust. Finding new high ground is much better. SM have realised their new price and have sold off their holdings to the herd by swamping the market with supply. This has the affect of sharply dropping the price to lock in the herd.

KRB and OKR - You're a bit naughty asking about these on a chart with no opening prices shown
I will guess at the OKR being number 5!
  • #23,569
  • Dec 31, 2012 6:49am Dec 31, 2012 6:49am
Quoting HiddenGap
Okay, we had some fun the last time we did this so let's try it again.

This time, each answer has two parts. The first part is the name. The second part is the "justification".
1. F. Supply Swamping Demand (SSD). This and the next bar creates a hidden gap and continues the move down from the previous bar. For a high volume that has the potential to be strong the reaction is poor and the low is taken out within two bars.

2. K. Potential Selling Climax. Higher volume than at 1, a sure sign that something is cooking, slightly better reaction with the next few bars closing up but still not showing a lot of strength.

3. I. Supply Coming in - not really sure what this is, we see an increase in volume and it closes in the middle before pushing down after ND.

4. O. Test - High (not less than previous two) volume test, low dips below previous 3 bars before closing on the high.

5. J. Shake Out - market is driven down quickly, almost to the low of the test on bar 4 before closing near the highs. Catching stops and or sucking people in short.

6. P. Buying Climax - Big spike in volume but the bar closes in the middle. Some weakness in this bar but this fails as the next bar is...

7. C. Basic Test - Test in it's simplest form, volume less than previous two, closes on the high. It doesn't make a lower low though, which would have been nice.

8. G. Up Thrust - Hidden up thrust. It thrusted up. Closed on the low.

9. No idea.
  • #23,570
  • Dec 31, 2012 6:53am Dec 31, 2012 6:53am
Some good responses so far, this forum needs an "appreciation" or "approve of this post" button. Then have the ability to sort the thread by this.
  • #23,571
  • Dec 31, 2012 7:03am Dec 31, 2012 7:03am
Quoting Intel
3 - This bar is more puzzling. Pres has it as a Supply swamping demand bar. I dissagree with this but only with the degree that supply is winning the battle. It shows that supply is winning but, there's nothing about the bar that says supply is SWAMPING demand. For me it just says that the market isn't ready to go up quite yet.
I see you and some others have said bar#3 is"supply swamping demand" why is this so when the bar is an upbar closing above previous 2 bars and the low is higher than prev 2 bars as well. AS this has happened after a climatic selling bar it can only mean demand swamping supply is it not?
  • #23,572
  • Edited 7:24am Dec 31, 2012 7:12am | Edited 7:24am
Quoting Gxp1
I see you and some others have said bar#3 is"supply swamping demand" why is this so when the bar is an upbar closing above previous 2 bars and the low is higher than prev 2 bars as well. AS this has happened after a climatic selling bar it can only mean demand swamping supply is it not?
Demand swamps supply on downbars also it was I not intel whom called it SSD. If demand had swamped the supply this upbar would have close on its high. This bar shows supply not demand.

Edit - I should have also said that if it was demand swamping supply bar 3 would have started to go down, not up and then we would have closed off the lows as the demand overtook the supply. We saw in this case an effort to rise met with sellers causing the fall off the highs to close around 50%.

Edit - Edit - or what Intel said right below me...
Today's zone = Tomorrow's opportunity!
  • #23,573
  • Dec 31, 2012 7:23am Dec 31, 2012 7:23am
Quoting Gxp1
I see you and some others have said bar#3 is"supply swamping demand" why is this so when the bar is an upbar closing above previous 2 bars and the low is higher than prev 2 bars as well. AS this has happened after a climatic selling bar it can only mean demand swamping supply is it not?
After the climactic action bar, if demand was swamping supply, price would have risen sharply but it didn't.....Why?
It is because there is still plenty of supply around. Supply is matching demand (roughly) as indicated by the close price being similar to the previous bar.
Pres and I both agree that there is plenty of supply at this level, we simply disagreed on how much, which in the grand scheme of things, is niether here nor there.
  • #23,574
  • Edited 9:44am Dec 31, 2012 9:12am | Edited 9:44am
Little short I took. HG's chart got me interested in the 12 minute chart so I dug out Polomine's indi and brought up a 1min chart with a 12x mutliplier...

We saw a huge volume wide spread up bar into that 3227ish rsistance, closed well off the high and then printed a rounding over top with a ND and then effort to rise no bar taking out the top of the WRB. What I don't like is not having the open line as I am not a big fan of these HLC bars.

Entry was 3218 needed 10 pips for 1:1 but I have my first target at 3203 for 1.5:1

Hourly chart is also showing some weakness into this resistance with that WRB and then an UT... waiting for a higher TF entry to see if one presents. Tommorow will be quiet though with many bank holidays. We do have some support at 3200 to contend with so time will tell.

While writing this post my intial target was hit (just barely) and we are seeing some demand.
Attached Image (click to enlarge)
Click to Enlarge Name: eu 12 minute.gif Size: 29 KB
Today's zone = Tomorrow's opportunity!
  • #23,575
  • Dec 31, 2012 10:22am Dec 31, 2012 10:22am
Quoting pres78
OOPS!!! Page 168 of my PDF, but yes page 167 of the actual book not including the cover (man I'm a dumbass!)
LOL.

As soon as posted my reply, I looked at my PDF version to see if it was on the same page as the hard cover book.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,576
  • Dec 31, 2012 10:59am Dec 31, 2012 10:59am
Quoting pres78
Little short I took. HG's chart got me interested in the 12 minute chart so I dug out Polomine's indi and brought up a 1min chart with a 12x mutliplier...

We saw a huge volume wide spread up bar into that 3227ish rsistance, closed well off the high and then printed a rounding over top with a ND and then effort to rise no bar taking out the top of the WRB. What I don't like is not having the open line as I am not a big fan of these HLC bars.

Entry was 3218 needed 10 pips for 1:1 but I have my first target at 3203 for 1.5:1

Hourly chart...
Nice clear analysis.Good work
  • #23,577
  • Edited 1:00pm Dec 31, 2012 12:06pm | Edited 1:00pm
Awesome. Really awesome.

Kudos to all who participated in this little exam.

I have to say that there is some real gold in the responses. If I was tech savvy enough, I would take all the responses and put them in a PDF.

I hope nobody gets too upset after reading what follows.

One of the intents of this test was to convey that in most cases names don't matter. If you look at the intervals in question, there was at least two possible responses for every one of them. That's why the second part was to include some "justification". The idea was to get into the mind of the posters and understand how he or she saw the interval (and is some cases the surrounding intervals).

If one sees a wide spread up interval on volume that is greater than average, that closes in the middle of its range, makes a higher high than the previous two intervals and is followed by the next bar being down, one has to see this as weakness. Whether this interval is Supply Swamping Demand (SSD) or Supply coming in or a Buying Climax matters less than the fact that one is able to see the weakness the interval represents.

To be sure, there are some names that are more appropriate than others at various times. A Buying Climax, for example, really does need a substantial up trend behind it. Whereas Supply Swamping Demand (SSD) would not.

Here are a few thoughts.

#4: This for me is a Basic Test. Intel's "justification" is the best I have ever seen.

#5: Yes this is a Outside Key Reversal (OKR), but more importantly it is a Shake Out. Pres78 gives a brilliant explanation here that is truly worth study.

#8: This interval is an Up Thrust. I was looking to see "justifications" that noted the close is down and therefore this would best be termed a Hidden Up Thrust.

#6: Supply Swamping Demand (SSD), Supply Coming In or Buying Climax all work for this interval. I like Supply Swamping Demand or Supply Coming in better because the volume is not black or into the salmon colored area of the volume histogram. And the very next interval is a Test. A Test of how much supply actually swamped demand on the previous interval.

#3: Supply Swamping Demand. I see this as a very telling bar. What's missing is the fact that the next interval is not down. Nevertheless, this interval makes a higher high, has an increasing spread, has increasing volume greater than average and closes up but in the middle of its range. The middle close tells me that there has to be supply on this interval. Otherwise the close should be higher.

#9: I thought more people would responded to this as a Two Bar Reversal. I really don't know what to call this one. I know there is evidence of strength. The interval is a wide spread down bar that closes off its low. It makes a lower low than the previous two intervals, and the next interval is up. In fact, the next interval does not make a lower low or even an equal low. It closes above the high of this interval and has increasing volume. This could only be if the previous interval had some "hidden buying".

#7: This is the most straight-forward interval. It is a Test. As noted by KF, we would prefer this interval to make a lower low, but that is not a requirement.

#1: Because we have a wide spread interval that closes off its low on climatic volume (black), this is Climatic Action. If you see this as a squat, then you are using some advanced reasoning. We tend to use the short hand definition for squat- narrow range on increasing volume. However the actual definition of a squat is decreasing MFI and increasing volume. But here's the rub. Under that definition any interval with increasing volume is potentially a squat.

KRBs. Once again, Intel is all over this one. The true definition of a KRB includes the open of the interval. I use H-L-C charts so there is no open and therefore no way to see a true KRB.

OKR: I am not concerned with the open on an OKR so they can still be seen on a H-L-C chart. Note this definition:

#5: Outside Key Reversal (up). Makes a lower low than the previous two bars. Makes a higher high than the previous bar. Closes higher than the previous bar's high and closes in the upper 80% of its range on increasing volume greater than average with the next bar up.

OFFICIAL KEY:

1. SOS

2. SOS

3. SOW

4. SOS

5. SOS

6. SOW

7. SOS

8. SOW

9. SOS
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,578
  • Dec 31, 2012 1:42pm Dec 31, 2012 1:42pm
Happy New Year !!!!!!!!!!!!!

As we close the door on a this year and look forward to an even more fruitful new one, I want to personally say "thank you" to every member of this community. There is so much knowledge being shared that I can not help but be awed. Thank you all for taking the time to help others down this path we call Volume Spread Analysis. I know that I am better because your efforts.

Inserted Video
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,579
  • Dec 31, 2012 2:03pm Dec 31, 2012 2:03pm
Quoting HiddenGap

#7: This is the most straight-forward interval. It is a Test. As noted by KF, we would prefer this interval to make a lower low, but that is not a requirement.
HG, silly question...what is the difference between a test that does not make LL (ie bar #7) and a NS? Yust curious about it...it is obvious that bar #7 means weakness.

Happy New Year from Italy
  • #23,580
  • Dec 31, 2012 2:25pm Dec 31, 2012 2:25pm
Quoting Scipio
HG, silly question...what is the difference between a test that does not make LL (ie bar #7) and a NS? Yust curious about it...it is obvious that bar #7 means weakness.

Happy New Year from Italy
I hope you meant that it was obvious bar 7 showed strength and not weakness as there was nothing weak about bar 7. They tested for supply and found none so the market went up. I will let HG answer the rest as he is our bar formation specialist. At the end of the day tests and NS bars are close to one and the same just some differences in the closes and spreads also you can have high volume tests but not high volume NS's.
Today's zone = Tomorrow's opportunity!
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