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vsa with Malcolm

  • #23,901
  • Apr 5, 2013 10:39am Apr 5, 2013 10:39am
Quoting joaoborras
If you said stop sell orders, you are right! And the smart money used it to buy euro. This kind of big stop hunts happens very often, mainly when the move is in its beginning. But don't think that VSA was wrong in giving us sell signals on Wednesday. There was SOW there and, sure enough, the pair fell yesterday.
well said! this has much to do with order flow where when the prices re-visit the support/resistance levels more than once there will be accumulation of stop orders and SM's very well aware and they hit these to get a better bid price.What is puzzling is there is no significant SOS behind the move so they did a good job hiding this.In fact you saw ND's and UT (today) in GBP near resistance level(1hr) .VSA says these are not significant when appearing after SOS behind it- its not there!
  • #23,902
  • Apr 5, 2013 12:56pm Apr 5, 2013 12:56pm
Quoting joaoborras
Congrats to SD and HG on AJ! Spot on in the demand coming in! I have to say that I didn't see that. Shame on me! Learned more with this one. Thanks for that! Cheers!
SD knows his stuff.

As for me, well, even a broken clock is right twice a day.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,903
  • Apr 5, 2013 1:39pm Apr 5, 2013 1:39pm
Quoting joaoborras
Hi Abhinkoi! I understand your feelings! These kind of moves makes us feel lost, angry. These rapid moves makes it easy for us to forget the big picture, because we see this huge move to the down just to see it go up again! What the f**k hell is going on here!!?? :-) Well, you know, VSA is all about reading the background and keep asking us "what is going on here?", all the time. Also, we know that the big players need liquidity to accumulate their positions(be it long or short). And, we know that stop loss orders are a good source of liquidity....
Hello Jo,

Thank you so much for such a detailed explanation and analysis on this mad move. Yes you are right that these moves makes us feel lost and angry but that gives us an opportunity to learn the missing part in our analysis. I dont know if we can be always (100%) correct by practising practising n practising VSA charts but to me the more I learn, the more hungry I become.

I have gone through your post #23836 & I am glad that your analysis proved right. The moment it started trading above 1.2880, it never seen that level again.

Yes I would have predicted the sell stop orders below the latest swing low.

Yes thats a very good idea to mark important levels/supply/resistance zones. I will keep that in mind.
  • #23,904
  • Apr 7, 2013 8:18pm Apr 7, 2013 8:18pm
Quoting Vcv13
can anyone please read this chart & tell what's going on here? I thought a distribution phase (circled area) has begun but price is just not going anywhere. {image} a more closer view of the chart {image} {image} Thank you
I do not like Indian stocks, they are hard to read. You see massive volume where it does not make sense to see massive volume, then you have giant shakeouts/up thrusts with very little volume, makes me think they hide volume and manipulate price. Probably the only way I would consider trading those stocks if if I could get tick volume (assuming the Indian market is like the US market and the volume/price is regulated).

Lets start with the shakeout that I marked the high of with the black line, notice how price responds by breaking the high of the shakeout and then comes back down to test the high.

As for distribution, once again you have this giant UT that takes up the whole chart, but with very little volume. I can not be for sure that this was a sell off. But you can see since this price has been contained between the high and low of this bar. Also notice in the red circle how the spreads of these bars are wider than most of the bars on the chart. Usually when spreads get larger that is a sign of accumulation or distribution. Seeing how this stock has been in an up trend and the giant up thrust this could indicate distribution. I would probably try to play this like that shake out. Wait for price to break through the low of the up thrust and sell any signs of weakness on when price pulls back.
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  • #23,905
  • Apr 7, 2013 8:33pm Apr 7, 2013 8:33pm
Quoting HiddenGap
SD knows his stuff. As for me, well, even a broken clock is right twice a day.

Don't let HG fool you into thinking he is a broken clock. After all he and Jo saw EU strengthening when I had my doubts.
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  • #23,906
  • Apr 8, 2013 12:27am Apr 8, 2013 12:27am
Quoting SimpleDev
I do not like Indian stocks, they are hard to read. You see massive volume where it does not make sense to see massive volume, then you have giant shakeouts/up thrusts with very little volume, makes me think they hide volume and manipulate price. Probably the only way I would consider trading those stocks if if I could get tick volume (assuming the Indian market is like the US market and the volume/price is regulated). Lets start with the shakeout that I marked the high of with the black line, notice how price responds by breaking the high of the...
is it a shake out? i thought SO happens when there is a down move behind it.its a trap move to catch the shorts below the last pivot,so overall there is strength therefore UT,s are a suspect-just my opinion in hind sight
  • #23,907
  • Apr 8, 2013 2:18am Apr 8, 2013 2:18am
Quoting Gxp1
is it a shake out? i thought SO happens when there is a down move behind it.its a trap move to catch the shorts below the last pivot,so overall there is strength therefore UT,s are a suspect-just my opinion in hind sight
VSA isn't meant to be a black and white methodology, try not to place rules on what has to happen, read what the market is telling you.

The up thrust occurred two months ago, since then price has only gone side ways. If the high of the up thrust was taken out in a few bars then it would be safe to dismiss it, but since price has been confined between the UT's high and low it would not be wise to over look it. From an end of day stand point while price is ranging between the high and low probably not a good idea to be in any sort of trade. Which is the reason why I said I would probably wait for the low to be taken out and then sell the weakness on a pull back.
  • #23,908
  • Apr 8, 2013 4:00am Apr 8, 2013 4:00am
Thanks for your posts SD & Gxp1

Quoting SimpleDev
I do not like Indian stocks, they are hard to read. You see massive volume where it does not make sense to see massive volume, then you have giant shakeouts/up thrusts with very little volume, makes me think they hide volume and manipulate price. Probably the only way I would consider trading those stocks if if I could get tick volume (assuming the Indian market is like the US market and the volume/price is regulated).
that's discouraging yes on papers Indian markets, mutual funds etc are all regulated but there's corruption everywhere...........

Quoting SimpleDev
As for distribution, once again you have this giant UT that takes up the whole chart, but with very little volume. I can not be for sure that this was a sell off. But you can see since this price has been contained between the high and low of this bar.
up till now I was only paying attention to high volume bars, what if the volume's not hidden? is such a wide UT only possible on a high volume?

anyway here's my view,

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The loss was not bad luck. It was bad Analysis - D.Einhorn
  • #23,909
  • Apr 8, 2013 4:57am Apr 8, 2013 4:57am
Quoting SimpleDev
I do not like Indian stocks, they are hard to read. You see massive volume where it does not make sense to see massive volume, then you have giant shakeouts/up thrusts with very little volume, makes me think they hide volume and manipulate price. Probably the only way I would consider trading those stocks if if I could get tick volume (assuming the Indian market is like the US market and the volume/price is regulated).
I haven't looked at Indian stocks at all but from what i've seen from the charts posted here, i'm not a fan either. Like you say, lots of upthrust and shakeout type bars that I would expect to have high volume associated with. Each chart seems to be quite a hard read, i'm pretty lost when it comes to looking at them!
  • #23,910
  • Apr 8, 2013 10:19am Apr 8, 2013 10:19am
Quoting Vcv13
Thanks for your posts SD & Gxp1 that's discouraging yes on papers Indian markets, mutual funds etc are all regulated but there's corruption everywhere........... up till now I was only paying attention to high volume bars, what if the volume's not hidden? is such a wide UT only possible on a high volume? anyway here's my view, {image}
Have you tried looking at weekly charts to get a clearer picture?
Seek not to change the world; seek only to change your mind about the world
  • #23,911
  • Apr 8, 2013 10:54am Apr 8, 2013 10:54am
Dear Friends,

I have a question. VSA says that WRB with HV/UHV contains selling but there were occasions when the price doesnt stop and continue to rise up n up...Even after UT with UHV and selling tail on the top we see price inching higher n higher.

My question is how do we remain on the right side always? How to identify correctly whether the wide range upbars with HV/UHV are bullish or bearish?

Please shed some lights over it.

You can refer UJ H1 as example.

Thanks
Abhinav
  • #23,912
  • Apr 8, 2013 1:43pm Apr 8, 2013 1:43pm
Quoting abhinkoi
Dear Friends, I have a question. VSA says that WRB with HV/UHV contains selling but there were occasions when the price doesnt stop and continue to rise up n up...Even after UT with UHV and selling tail on the top we see price inching higher n higher. My question is how do we remain on the right side always? How to identify correctly whether the wide range upbars with HV/UHV are bullish or bearish?
First, please understand that Wide Range Body (or Bar) Analysis is not a part of VSA. It's an incredible compliment to VSA, but nevertheless, it's not a part of VSA.

Now, with that said, Volume Spread Analysis does look at the spread (range) of bars as one of the three key compents. When you see a wide range interval on high to ultra high volume, the first question to ask is where is the close?

If the close is on the high, despite the fact that markets do not like wide spread high volume up bars, it can be a bullish interval. You have to wait to see what happens on the next bar. If the next bar closes down, then you know there was some selling in the wide spread interval. Even if the next bar is down, you still need to understand that there is a such thing as momentum. Momentum can cause a trend to continue. As Tom says, trends last longer than you think. Also keep in mind that there can be 25 intervals from the first sign of distribution (wide spread up bar on ultra high volume) to the conclusion of the pattern.

If you see a wide spread up bar on very high volume that closes off its high with the next bar down but you see a test 1-5 intervals later, the market is strong and not weak.

One also needs to look to the left. If there is a resistance area to the left, the spread will widen and the volume will increase as the market attempts to get thru this area. Here the spread and volume represent "Effort".

VSA 101 states:

When weakness appears, it appears on up bars.

Another way of saying this is:

Weakness appears on up bars, but not all up bars are weak.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #23,913
  • Apr 8, 2013 7:03pm Apr 8, 2013 7:03pm
Quoting abhinkoi
Dear Friends, I have a question. VSA says that WRB with HV/UHV contains selling but there were occasions when the price doesnt stop and continue to rise up n up...Even after UT with UHV and selling tail on the top we see price inching higher n higher. My question is how do we remain on the right side always? How to identify correctly whether the wide range upbars with HV/UHV are bullish or bearish? Please shed some lights over it. You can refer UJ H1 as example. Thanks Abhinav
HG made the point for absorption volume, that is the case when HV in up bars is bullish.
Now, one thing that can serve as indication for what is coming next is to wait to see where the price move next the HV bars.
For HV up bars, if the price falls into the bar's low with lowering volume, than it is testing the possible supply to the next push up. But, if the price continues to rise with lowering volume, it shows that the HV up bar was indeed weak.
So, after the HV up bar, if the price consolidates low, it is bullish and if the price consolidates high in the range, it is bearish.
Well, it is not a rule but something I observe often.

Anyways, what comes next will tell the truth. Tests, SO and no supply confirms bullishness and ND's, UT and failed tests, confirm the weakness.

Sorry if it is more confusing than clarifying! :-)
  • #23,914
  • Apr 8, 2013 9:59pm Apr 8, 2013 9:59pm
Quoting abhinkoi
Dear Friends, I have a question. VSA says that WRB with HV/UHV contains selling but there were occasions when the price doesnt stop and continue to rise up n up...Even after UT with UHV and selling tail on the top we see price inching higher n higher. My question is how do we remain on the right side always? How to identify correctly whether the wide range upbars with HV/UHV are bullish or bearish? Please shed some lights over it. You can refer UJ H1 as example. Thanks Abhinav
Since we are all on the subject of absorption volume versus weakness volume on up bars thought it would be good to throw up a chart.

US stock GE on daily.

Bar 1: Gapped up on ultra high volume and we have a top to the left of it. As a generality gapped up on ultra high volume is weakness but we must sit on our hands and watch how the market responds to this bar.

Bar 2: A test, let me start out by saying it would be very risky in my opinion to go long on this bar. This test could easily fail, I think it would be better to see how the market reacts to the test. Which the next 2 bars are up bars, so the test was successful!

Bar 3: Another test, this time the low of the test is above the high of bar 1, which I feel is the safest entry.

Bar 4: Another gap up on very high volume, also another top to the left, could be absorption.

Bar 5: 2 bar reversal, market showing signs of weakness.

Bar 6: A test, once again not a good time to go long due to this test is still with in bar 4.

Bar 7 & 8: Both Up thrusts, showing us that bar 4 was indeed weak and time to start looking for shorts as price begins to roll over.
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  • #23,915
  • Apr 8, 2013 10:53pm Apr 8, 2013 10:53pm
Quoting SimpleDev
Since we are all on the subject of absorption volume versus weakness volume on up bars thought it would be good to throw up a chart. US stock GE on daily. Bar 1: Gapped up on ultra high volume and we have a top to the left of it. As a generality gapped up on ultra high volume is weakness but we must sit on our hands and watch how the market responds to this bar. Bar 2: A test, let me start out by saying it would be very risky in my opinion to go long on this bar. This test could easily fail, I think it would be better to see how the market reacts...
Great analysis!
Please allow me to open a discussion that is like the one we had about AJ, some days ago.
Here is your chart on which I made some annotations(sorry!):

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The question is, how to work the short having a demand area near behind? I ask it because it is something that puzzle me a lot. When I see charts like this one(and the AJ, for instance), I also start to think shorts, just to see the price bounce off of the demand area.
Well, maybe it is it. Go short now or a bit higher, close at the demand level and wait the next setup! :-)

A more general question is how to "project" or "predict"(I hate this word...) the extent of the next move. Do you use P&F to make projections?

Cheers!
  • #23,916
  • Apr 8, 2013 11:27pm Apr 8, 2013 11:27pm
Quoting joaoborras
The question is, how to work the short having a demand area near behind? I ask it because it is something that puzzle me a lot. When I see charts like this one(and the AJ, for instance), I also start to think shorts, just to see the price bounce off of the demand area. Well, maybe it is it. Go short now or a bit higher, close at the demand level and wait the next setup! :-) A more general question is how to "project" or "predict"(I hate this word...) the extent of the next move. Do you use P&F to make projections? Cheers!
Lets start with your last question first. As far as my analysis goes I only use VSA and a bit of S/R. PnF is on my list of things to learn but it is not very high on my priority list and I have no idea even where to begin with the supply/demand areas that you and HG draw.

I am also a big advocate of using every TF available to you, with that here is a monthly chart with some Fibs. I use fibs more on stocks than forex, fibs work better in my experience on stocks and forex seems to like marking previous highs and lows. On the monthly chart last month was a low volume UT into 50% level, which I am sure we all know 50% level is a big psych level and I just don't see this stock pushing up through the level with such low volume. So weak on monthly.. weak on daily.. Which means I would not worry (really I would not have seen that previous demand zone that you drew out). I would think this stock will go and revisit the previous support level at 19.64.

Its hard to put rules on what I look for on longs or shorts, just have to read the market and treat every situation different. As far as that AJ trade, I saw weakness, but that last push down no one was interested in the down move just then, so it just made sense not to sell it. Its like trying to find strength/weakness in the market then watching how the market reacts to it.
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  • #23,917
  • Apr 8, 2013 11:43pm Apr 8, 2013 11:43pm
Quoting SimpleDev
Lets start with your last question first. As far as my analysis goes I only use VSA and a bit of S/R. PnF is on my list of things to learn but it is not very high on my priority list and I have no idea even where to begin with the supply/demand areas that you and HG draw. I am also a big advocate of using every TF available to you, with that here is a monthly chart with some Fibs. I use fibs more on stocks than forex, fibs work better in my experience on stocks and forex seems to like marking previous highs and lows. On the monthly chart last month...
Thanks for your comments, SD.
I have one weak point(I mean, one among many...) that is the readings on high time frames. Unfortunately I don't do it that much. I mean, I do read but I easily lose the larger picture when I start to look at my 15min, 1min charts. Have to improve it a lot.

Looking at your monthly chart, yes, it makes sense to prioritize the shorts.

As for supply/demand areas, I suggest you have a look on Sam Seiden's posts at fxstreet.com or at Online Trading Academy, that is where he works. I am sure you'll master it in 5min.

Cheers!
  • #23,918
  • Apr 9, 2013 12:06am Apr 9, 2013 12:06am
Quoting joaoborras
Thanks for your comments, SD. I have one weak point(I mean, one among many...) that is the readings on high time frames. Unfortunately I don't do it that much. I mean, I do read but I easily lose the larger picture when I start to look at my 15min, 1min charts. Have to improve it a lot. Looking at your monthly chart, yes, it makes sense to prioritize the shorts. As for supply/demand areas, I suggest you have a look on Sam Seiden's posts at fxstreet.com or at Online Trading Academy, that is where he works. I am sure you'll master it in 5min....
Thanks I will do that.

I have been doing my best to keep myself from posting up charts before hand on what types of setups I am looking for, because I don't want to influence people (so skip this post if you are easily influenced! ) But I am a little post happy today so here is what I see..


EU just seems a bit wonky and AU makes more sense to me. High volume on 2 up bars, each up bar followed by a down bar, I wouldn't say no to a ND or UT today.
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  • #23,919
  • Apr 9, 2013 12:11am Apr 9, 2013 12:11am
Quoting SimpleDev
Thanks I will do that. I have been doing my best to keep myself from posting up charts before hand on what types of setups I am looking for, because I don't want to influence people (so skip this post if you are easily influenced! ) But I am a little post happy today so here is what I see.. EU just seems a bit wonky and AU makes more sense to me. High volume on 2 up bars, each up bar followed by a down bar, I wouldn't say no to a ND or UT today. {image}
SD, I think that posting charts is very good, because we are all looking at the same things. I think it helps everyone(again, because we are all concentrated in the same thing).
And, if things are good, I am happy to be influenced! :-)

Like your AD. The early SOW in EU already worked very well during Asia. Maybe a sell on retrace to the highs, on ND or UT.
  • #23,920
  • Apr 9, 2013 2:21am Apr 9, 2013 2:21am
Quoting abhinkoi
How to identify correctly whether the wide range upbars with HV/UHV are bullish or bearish?

actually, a wide spread HV/UHV may not be bearish only thing is they contain supply especially a UHV up bar, so we would like to see a successful test of the high of such a bar.

a wide spread HV up bar could also be an effort to rise.

a narrow spread high volume up bar on the other hand is dangerous (a sign of desperate selling)
The loss was not bad luck. It was bad Analysis - D.Einhorn
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