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  • #23,681
  • Feb 13, 2013 2:05am Feb 13, 2013 2:05am
https://lh4.googleusercontent.com/-P...sa%2520goa.jpg

Thanks KinsaleForex

Now if you can tell something about that bar (specified with an arrow) it's a Gap-down bar with massive volumes, indicating strength, why market has not rallied even after this strength?
The loss was not bad luck. It was bad Analysis - D.Einhorn
  • #23,682
  • Feb 13, 2013 12:02pm Feb 13, 2013 12:02pm
Quoting Vcv13
https://lh4.googleusercontent.com/-P...sa%2520goa.jpg

Thanks KinsaleForex

Now if you can tell something about that bar (specified with an arrow) it's a Gap-down bar with massive volumes, indicating strength, why market has not rallied even after this strength?
One bar doesn't mean anything by itself. There is no "magic bar" that tells you to buy an asset with immediate expectations of a rally. It just doesn't work that way. Nothing does with any real precision.

What you are looking at is a lot of selling. Someone (almost certainly Smart Money) sold off some of their positions overnight and pushed the price way down before the next open. That's why there is a gap down. There is massive volume that indicates that someone is buying into it, possibly SM, but look at the close- it's on the low. And what do you see previous to that? An uptrend. I wouldn't think that Smart Money is prepared to buy at those levels after price has just moved up so strongly. The declining volume on the following up-bars is further confirmation of that fact. They aren't ready to move price up.

Many times I've noticed that, after a strong uptrend, price will often gap down and the following day will be massive volume and will result in a downtrend.

Think about it like this- What would you do in a packed theater if someone screamed "FIRE!" and everyone started clogging the doors trying to get out? You don't want to be the last one out cause you're likely to get burned, possibly die. You would probably start fighting to get out of those doors as soon as possible. Most of you would. Most of everyone you know would. That's the "herd mentality" at work. And what you are pointing at, to me, is Smart Money screaming "FIRE!" and the herd selling off as quickly as possible so they can keep from being the one who gets burned.

I don't know if this will help, but every chart I watch, I ask myself these questions:
"Can I tell if Smart Money is involved?"
"What is Smart Money trying to show the herd? Weakness? Strength?"
"What are the motives behind this show? Trying to get the herd to buy or sell?"
"What are their goals in doing this and can I take a trade to profit from it as they plan to?"
"What point of entry would confirm that I am right and limit my risk?"

If I cannot answer one of these questions, it's time to step aside and continue watching until I'm sure of what I'm seeing. Not everything you see fits into a neat little box that can be categorized, and if it's not obvious, just don't trade. Move onto something else.
Currency is a joke. And that's precisely why I trade it.
  • #23,683
  • Feb 14, 2013 9:16am Feb 14, 2013 9:16am
Quoting Vcv13
https://lh4.googleusercontent.com/-P...sa%2520goa.jpg

Now if you can tell something about that bar (specified with an arrow) it's a Gap-down bar with massive volumes, indicating strength, why market has not rallied even after this strength?
Not Kinsale, but I'll give my opinion . That bar shows weakness, because there seems to have been distribution before and it gapped down. Though the volume is massive and the next bar is up, so it must have contained buying as well. Notice the prices went sluggish after that. But it's hard to tell you much because I'm not seeing the bigger picture. In stocks you have to see the weekly timeframe too (like Tom Williams suggests), see the trend and see if accumulation or distribution phase is happening (it only happens in beginning or end of trends). That'll tell you the side the smart money is in.
  • #23,684
  • Feb 14, 2013 10:02am Feb 14, 2013 10:02am
I took my time answering this and it's at the stage now where I can't really answer it any better than the previous two posts! Thanks for the replies MtDarkness and Jasus.
  • #23,685
  • Feb 14, 2013 10:19am Feb 14, 2013 10:19am
Actually, I do have something to add. I'm in work so don't have my normal annotating program, MS Paint will have to do!

1. Previous high.
2. Ultra high volume pushing through the high at 1. This is absorption volume.
3. The original bar in question. This comes down to the high of 2. As there was buying here from when it pushed through the top at 1 there was bound to be a reaction to it as we came back down. On this occasion there was some buying at the high of 2 and we got a slight reaction, but not enough. I'd imagine bar 3 contains some absorption as well.
4. Looking further right we have another high volume bar. Look where it is. Right into the low of bar 3/high of bar 2. On this occasion the market found more selling and we pushed down from this area.

It's all so much easier in hindsight.
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  • #23,686
  • Feb 14, 2013 1:13pm Feb 14, 2013 1:13pm
Quoting KinsaleForex
Actually, I do have something to add. I'm in work so don't have my normal annotating program, MS Paint will have to do!

1. Previous high.
2. Ultra high volume pushing through the high at 1. This is absorption volume.
3. The original bar in question. This comes down to the high of 2. As there was buying here from when it pushed through the top at 1 there was bound to be a reaction to it as we came back down. On this occasion there was some buying at the high of 2 and we got a slight reaction, but not enough. I'd imagine bar 3 contains some absorption...
I'm only used to identify absorption volume at supports/resistance, but it makes sense on a breakout bar level as well. Thanks, nice analysis
  • #23,687
  • Feb 14, 2013 10:32pm Feb 14, 2013 10:32pm
Quoting KinsaleForex
I took my time answering this and it's at the stage now where I can't really answer it any better than the previous two posts! Thanks for the replies MtDarkness and Jasus.
Sorry, Kinsale. lol Didn't mean to steal your thunder. I get bored in front of my computer waiting for the right setups to develop. Changed my title appropriately. ^_^
Currency is a joke. And that's precisely why I trade it.
  • #23,688
  • Feb 15, 2013 1:48am Feb 15, 2013 1:48am
Thanks for all the helpful tips guys.

I remember Tom saying weakness always appears on Up bars, & strength always on down bars, so you see what was bothering me here. The bar had everything, down & high volume, but guess I have to take other things into consideration as well.

just one more query, is the close on the bar (high or low) equally important? if the same bar was a reverse upthrust it would of made it a lot bullish, right? or had the same bar been at fresh new low ground & with all that volume it would have indicated strength?
The loss was not bad luck. It was bad Analysis - D.Einhorn
  • #23,689
  • Feb 15, 2013 3:35am Feb 15, 2013 3:35am
Quoting MtDarkness
Sorry, Kinsale. lol Didn't mean to steal your thunder. I get bored in front of my computer waiting for the right setups to develop. Changed my title appropriately. ^_^
Haha, I like the title! No need to be sorry, you didn't steal my thunder, anyone was free to answer and I think you did a better job than I would have done! I like the "Fire" analogy as well, nice way of explaining it.

You mentioned being bored, it has been one of those weeks I feel...

Quoting Vcv13
Thanks for all the helpful tips guys.

I remember Tom saying weakness always appears on Up bars, & strength always on down bars, so you see what was bothering me here. The bar had everything, down & high volume, but guess I have to take other things into consideration as well.

just one more query, is the close on the bar (high or low) equally important? if the same bar was a reverse upthrust it would of made it a lot bullish, right? or had the same bar been at fresh new low ground & with all that volume it would have indicated strength?
The close definitely plays a role as well. Like you say, if it had closed on the high it could have been considered bullish. But these can all fail as well. As MtDarkness mentioned, it's not just about one bar. You need to look left and right. What's happening before the bar in question and what is the reaction to said bar?
  • #23,690
  • Feb 15, 2013 1:00pm Feb 15, 2013 1:00pm
[quote=KinsaleForex;6448929]Haha, I like the title! No need to be sorry, you didn't steal my thunder, anyone was free to answer and I think you did a better job than I would have done! I like the "Fire" analogy as well, nice way of explaining it.

You mentioned being bored, it has been one of those weeks I feel...
/QUOTE]

Yeah, I can't take credit for that analogy, I read it somewhere. It seemed appropriate here, though. Thanks for the vote of confidence. I'm still learning, and hope to never stop.

And yeah, every week is boring to me. Digging through currencies, stocks, and futures every day/week, and waiting for PA to finish developing so I can enter on a confirmed signal is enough to bore me to tears sometimes. I don't know what I would do without FF and Youtube!
Currency is a joke. And that's precisely why I trade it.
  • #23,691
  • Feb 18, 2013 4:23am Feb 18, 2013 4:23am
EJ-M5
Looks like end of the rising market.
We`ll see.
  • #23,692
  • Edited Feb 21, 2013 1:13am Feb 20, 2013 6:53am | Edited Feb 21, 2013 1:13am
Dear VSAers,
Thank you very much for keeping this wonderful thread alive.

Please let me draw your attention to GBP/USD now as the pair just has approached a historical support level.
Could you please share your thoughts on what is happening now at the level (in VSA terms).

Kind regards and thank you for your guidance.

Jim Reddy
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  • #23,693
  • Feb 21, 2013 9:12am Feb 21, 2013 9:12am
just buy @1.520 should it retrace
  • #23,694
  • Edited 11:14pm Feb 25, 2013 10:55pm | Edited 11:14pm
Quoting juhanimi
EJ-M5
Looks like end of the rising market.
We`ll see.
Possible stopping volume/ selling climax M5.
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  • #23,695
  • Feb 26, 2013 11:58pm Feb 26, 2013 11:58pm
Can we trade options with the help of VSA? or do we need some additional volatility indicators?

Thank you.
The loss was not bad luck. It was bad Analysis - D.Einhorn
  • #23,696
  • Feb 27, 2013 4:04am Feb 27, 2013 4:04am
Quoting Vcv13
Can we trade options with the help of VSA? or do we need some additional volatility indicators?

Thank you.
I trade options with my retirement account. Once I find a VSA setup and an entry bar on the stock chart I wait till the next day to confirm the entry bar (I.E. like a test bar in a rising market with strength in the background) if successful then entering in on the option.
  • #23,697
  • Feb 27, 2013 7:19am Feb 27, 2013 7:19am
Kind of sucks!

I have been watching AU for a couple of weeks and thinking it was under accumulation, after all it has been going sideways since 2/6 and been bouncing around in what was almost a double bottom at weekly support of 1.0250.

I was looking for a break up above 1.0350 and come back down and test it or possibly 1.0290 on low volume for entry, which as you can see the past 2 days price was pushed down.

Market professionals you win this round.
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  • #23,698
  • Feb 28, 2013 12:48am Feb 28, 2013 12:48am
Quoting SimpleDev
I trade options with my retirement account. Once I find a VSA setup and an entry bar on the stock chart I wait till the next day to confirm the entry bar (I.E. like a test bar in a rising market with strength in the background) if successful then entering in on the option.


I'm new to all this trading thing, what I learned about options is there are other factors like time erosion & volatility that affect the option price, what I mean is options not rising with stock & this can be bcoz of decrease in implied volatility, so can VSA help with volatility?

Thank you
The loss was not bad luck. It was bad Analysis - D.Einhorn
  • #23,699
  • Feb 28, 2013 2:31am Feb 28, 2013 2:31am
Quoting Vcv13
I'm new to all this trading thing, what I learned about options is there are other factors like time erosion & volatility that affect the option price, what I mean is options not rising with stock & this can be bcoz of decrease in implied volatility, so can VSA help with volatility?

Thank you
It sounds like you are wanting to specialize in options which you would probably be better off trying to find a forum that is dedicated to options, such as ForexFactory is dedicated to the forex market.

As far as VSA goes, no it will not help you with volatility, VSA is a methodology that helps you determine if the stock/currency pair is being bought or sold.
  • #23,700
  • Feb 28, 2013 4:32am Feb 28, 2013 4:32am
Quoting SimpleDev
It sounds like you are wanting to specialize in options

I donno if I should go ahead with options, initially I thought I could use my VSA & P&F chart reading skills in option trading, but it seems all my knowledge of reading charts is of no use in options, options require good management skills in Option Greeks.

Thanks anyway...
The loss was not bad luck. It was bad Analysis - D.Einhorn
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