vsa official summary part1

7/30/2019 VSA Official Summary Part1

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VSA Official Summary Part 1

This is an official compilation thread that will contain selected posts from the highly popular [VSA]Volume Spread Analysis thread located here. Many thanks to Tingullforcreating this thread andPivotProfilerforallhis valuable inputs and making this thread possible.

The summary format will contain a table of content and a reference of the original post and poster. Thisthread will show various chart samples, commentary, questions, as well as useful posts that will provide a

comprehensive summary to the original VSA thread.

The purpose of this thread is to provide an easier way to study the valuable VSA material. Many thanks toall those who have contributed to the 130+ pages of VSA material possibly making it one of the mostcomprehensive VSA thread on the net.

Please do not use this thread to post any comments. Please post all suggestions, questions, andfeedbacks in this thread located here. If you find I have missed a post that should be included in thissummary, please do not hesistate to leave your comments. There are over 130 pages on the VSA threadso any help pinpointing relevant posts are appreciated.

Please note that this summary will be developed further as the VSA thread expands. If any edits should be

made, please post your request in here as well. I have compiled this summary by briefly reviewing the VSAthread again and may have missed out a few posts and charts.

VSA Official Summary Part 1 will contain up to page 35 on the original thread.

Enjoy!

[multipage=VSA Intro]Posted by PivotProfiler in this thread.

1. Volume is activity. Hence tick volume can be used where actual contract volume is not available.

2. Two ways of looking at volume:* relative volume: volume in relation to the previous bar or bars.* actual volume: the amount (size) of volume an individual bar represents.

3. Strength comes in on down-bars and weakness comes in on up-bars.

4. Markets do not like high volume up bars with wide spreads? Why because there is a possibility ofProfessional Selling into such a bar.

5. Professional Money deals in large amounts and thus sells into up bars so as not to be hurt by their ownselling. The converse would also be true.

6. 85% of a volume histogram represents Smart Money activity.

7. Smart Money is active on all time frames. Various time frames are used to hide their actions from thosethat can read a chart and each other.

Futher comments by PivotProfiler located here.

"In any business where there is money involved and profits to make, there are professionals. We seeprofessional diamond merchants, professional antique and fine are dealers, professional car dealers andprofessional wine merchants, among many others. All these professionals have one thing in mind; they

need to make a profit from a price difference to stay in business.

The financial markets are no different and professional traders are also very active in the stock andcommodity markets-these professionals are no less professional than their counterparts in other areas.....

It is important to realize at this stage, that when we refer to the definition of professional, we are NOT


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talking about the 'professionals' who run investment funds or pensions...........

So what do I mean by a professional trader? Well, one example is the private SYNDICATE trader that workin co-ordinated groups to accumulate (buy), or distribute (sell), huge blocks of stock to make similarlyhuge profits." Tom Williams, Master the Markets, p.14

Syndicate traders are secret, well-heeled, highly skilled, and happy that you believe (wrongly) what youbelieve.

Posted by Blowfish here.

Just a quick point. 'Pure' VSA as described by Williams does not pay any attention to the open. Williamsdoes look at the previous close in comparison to the current close. In fact this is the basis used todetermine an up bar / down bar.

He also looks at net change (last close -> current close) but thats a fairly secondary thing and not writtenabout anywhere. Most of the information is there with HLC bars though perhaps not in as visuallyaccesible form as a candle. Of course the only time that it is not is when there is a gap i.e. last bar close this bar open. Intraday not likely to be much of a problem. When there are gaps VSA may concider abar an upbar where a traditional candle may concider it a downbar.

The thinking is that the close is the most imortant price point as it represents the result of the strugglebetween the bulls and the bears for the particular interval you are looking at.

[multipage=VSA & Candlesticks]Regarding VSA and candles:

Posted by PivotProfiler in this thread here.

It should be said that candle can be used. TG offers them because many traders like them. I used to likethem myself. But bars are easier to see especially at first.

Tom Williams (father of VSA) uses bars

Todd Krueger (TG and leading VSA expert) uses barsGavin Holmes (TG) uses barsSabastin Manby (Tom's friend and VSA expert) uses bars. Read his article on the T2W forum.Joel Pozen (Formerly of TG, Student of Richard Ney, and one of the best chart readers, second only toTom Williams) uses bars. Check out his site at Tradingmentor.com

If one uses candles, one need to remember that the close is more important than the open. Hence while acandle may close in the middle and have an equal open, what matters first is the middle close. The factthat the bar is a Doji is secondary.

As far as mutliple time frames. The best approach may be to find certain support/resistance levels onvarious higher time frames, but trade off of just one lower time frame chart.

[multipage=VSA Scenarios]Listed created by Tasuki here.

Interesting discussion, folks. What I'd like to see is a compendium of VSA setups, with a dozen or soexamples of each, to show how the same setup might look with different scenarios. I've only been studyingVSA for a little while, and Tradeguider says it has over 400 signals, but they seem to come down to acommon few, really:

1. tests (successful and unsuccessful)2. shakeouts3. no demand4. stopping volume

5. pushing through supply6. upthrust7. selling/buying climax8. climactic action9. support/weakness coming in

10. trap up/down move


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11. no result after strong effort12. selling/buying pressure13. bottom reversal14. end of a rising market

[multipage=Chart Examples Part 1]A series of charts posted by various members.

Chart by PivotProfiler in this thread.

I place a small dot on all bars that have volume less than the previous two bars. I also place an diamondon bars with narrow ranges and increased volume.

Chart posted by Tingull in this thread.

Trade I took today using VSA techniques. Notice when price reached the weekly pivot that we had a widerthan average spread and a LOT of volume and then price closed right near the highs of that bar. About10 seconds before that 5min bar closed I went long at 148 and was out for a 10 point gain (my personalstrategy right now...it ended up going for much more I know.

Chart posted by Wookey in this thread.


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The first green rectangle is "Strength coming in" signal. The bar has very wide spread, ultra high volume,it closed in the middle part of the bar and made new low. Basicaly, I think, the most nervious sellers

started fixing their profits.

The next red triangle was identified as "No Demand" signal. The bar has narrow spread and low volume. Itsignals the end of retracement. You may disregard that signal in ranging market as not really important.

The next green rectangle is called "Climactic action". You see it has ultra wide spread and ultra highvolime. In fact it's the widest and highest by volume bar of the day. When you see a bar like this youshould think if it's a selling or stoping volume. You may anticipate it knowing about strong support at12190, or wating for the confirmation which happened on the next bar. In Drummond Geometry a bar likethat is called an exhaust.

The second red triangle is a "No Demand" bar again.

Next signal is missed here but you already should see that if you combine two bars in 10 min bar it will bethe same signal as the first one.

And the last red rectangle is Upthrust. The volume is not so high, spread is wide, high is hihger thanprevious several bars and the close is in low part of the bar. They describe it as stop hunting desined bymarket makers to mislead traders.

Chart posted by Tingull and commentary by PivotProfiler from this thread.

One note on stopping volume. Tom Williams, the father of VSA, would enter on the close of that bar. TG,

however would not place a sign of strength until the next bar closes and is an up close. (2 bar pattern).

Getting in at the very bottom or top is not the most important thing. Here the best entry is after the test.Why? Because we have seen the strength come in on the stopping volume. Then we see a No Supplyindication followed by a test for supply.

The Smart Money wants to make sure that there are no sellers out there to impede the mark up phase.That is why they test the market. Of course, the mark aggressive you are as a trader the earlier you wouldenter. But you should be looking for the bar after the volume spike (stopping volume) to confirm beforeentry.

Commentary by PivotProfiler located here.


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The No Buying pressure is a bar that closes up from the previous bar and closes on its high but hasvolume less than the previous two bars (and ideally volume less than average).

Although price is moving up, the Smart Money is not involved in the push. Remember, 85% of the volumehistogram represents Professional Money. So no buying pressure is coming form the pros.

The next bar is down. But here too we see a lack of Smart Money activity. Thus when we say, No Supply,we mean no supply (selling) from the Professional Money.

What is happening is this: the market is moving up, but the Pros are not yet fully interested. W hy? Aftersuch a move down they want to make sure there are no more sellers left in the way of an up move. Asthey wait to see what happens the market moves up but then stops. The next bar is down on even lessvolume. The Pros did not step in and start selling (no supply).

Just to be sure there are no sellers, the Smart Money now Tests the market on the next bar. They take iteven lower and find no sellers (volume is low) and thus take price back up to close on or near the high.

Once we see the Stopping Volume we should begin to look for a No Supply or Test bar. When we see theNo Demand, we do not automatically look to go short. So our bias isn't changed. We see strength in theform of the Stopping volume and are looking to go long. The No Demand helps set up the subsequent NoSupply and test formation.

Charts and commentary posted by Tingull from this thre ad here and commentary provided byPivotProfiler from this thread here.

Tingull: Perfect today. Note the HUGE action happening here in the circled bar right at VAH...you can alsosee a diverging delta, showing selling waning, and then BAM!!! You could also notice the increasingvolume coming into that VAH. While this may lead some to think that we will go lower...VSA makes you waitfor confirmation

Good thing...that abnormally large volume spike with closing price in the middle of the bar is showing youright there that professional activity has come into the market.

PivotProfiler: Nice observations.

A wide spread down bar (close lower then previous bar) that has ultra high volume and closes in themiddle of its range is a telltale sign of a transfer of ownership.

The fact that this is happening at the VAH is of no real surprise either. These areas tend to be whereProfessional Money will show itself. That is why Gavin talked about the importance of (1) volume (2)support/resistance.

For me, what is more important than how one arrives at the support/resistance area, is that one PAYSATTENTION TO PRICE at these areas. That is, going long as price trades down to these levels makeslittle sense no matter how "proven" the support area may be. Paying closer attention to what price is doingat this time, however, does make sense.

Support/Resistance areas can not always hold. Otherwise there would be no such thing as a trend. Hence


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what we really want is to force the Professional Money to show itself in these "expected" areas. Theirintentions-to go thru or to respect the area(s) can be seen on the chart.

Charts and commentary by Vercingetorix in this thread here.

I was wondering what you thought about the stock indexes. Looking at the dow I would think that there isbackground strength, but still a lot of supply. Now bear with me, the concepts of VSA are new to me sothis might be totally off, but here is what I see:

1st arrow) We had that down day on a wide spread and high volume the day before. This bar is an up baron even higher volume. Does this indicate 'hidden' buying on the wide spread down day?

2nd arrow) We make new lows but close near the highs. Is this a stop bar or a test bar? The volume is stillhigh so if it is a test bar does this indicate there is still supply?

3rd arrow and 4rth arrows) These bars look like no demand which would make sense if professionals wantmore stock at lower prices.

5th arrow) Is this a stop bar, test bar, or down thrust bar? either way I take it to be bullish since we closedon the highs (and found support @ 200 ema). Since we took out the lows from the previous move down itlooks like a giant stop run on the daily time frame.

I'm probably off on my analysis, but it looks like all the market needs is a shakeout move and then itshould rally. I would be very interested in your guys comments.

PivotProfilers reply located here.

I wanted to redress this nice post. I have taken another screen shot that is more up to date. Admittedly,this is after the fact as well as hard right edge analysis.

First, Todd Kreuger still sees weakness in the market and is calling for prices to fall this week. Note thatthe last black double arrow points to Fridays action. This bar is a NO DEMAND bar: it closes up fromprevious bar, closes in its middle and has volume less than the previous two bars.

I will begin at the beginning.

The first thing we see is a wide spread down bar on ultra high volume. This bar is also a W RB. WRBanalysis tells us that changes/shifts in supply/demand occur in bars such as these. From a VSAperspective, we have a large range bar that closes down from the previous bar, but closes off its low withultra high volume. THERE MUST BE DEMAND (BUYING) IN THIS BAR. If this bar was weak, then the closeshould be on the low.

The next bar is key. This bar closes up. Truly if the previous bar was selling, then this bar should NOT beup. However, we need to take a look at this up bar. Note that the volume is even higher than the previousbar, but the range is narrow. Something is keeping the range down: Supply (Selling Pressure).

The next bar is a High Volume Test. It closes on or near its high, makes a lower low and closes below theprevious bar. Again the volume here is high for a test. Which is why the next bar is down and what weactually have is a FAILED TEST.

Now jump to the next bar with the double arrow. This bar closes lower than the previous bar, closes on ornear its lows and has volume less than the previous two bars. THIS IS NO SUPPLY.

We do indeed move up a bit from this point. Price moves up and then comes back down. At this point, oursecondary method (Japanese Candlestick patterns) is traversing into a valid bullish white hammer pattern.

Note the Hammer. THIS IS ANOTHER TEST. The bar makes a lower low, closes on or near its high andcloses up with high volume. If the volume was ultra high, we might call this a SHAKE OUT and seestrength, but as a high volume test we see weakness. The Professional Money is testing for sellers and


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they are finding some. In other words, there is supply underneath this market. Still, price moves up.

We do expect a move back into the WRB support/resistance zone. The reason is beyond the scope of thisthread.

Which brings up back to the NO DEMAND sign on Friday. If you use the WRB's as profit target signalsthere was two so far. It may be time to move the stop just below the last WRB.

Chart posted by Soultrader from this thread.

Here is an interesting chart from todays session. Notice new lows with lower volume. Hopefully some ofyou YM traders were able to capture the reversal movement.

Chart analysis provide d by PivotProfiler in this thread here.

First we see a dark WRB followed by a GAP in price. Note the first candle with a double arrow. Notice thatthe volume is ultra high and the bar closes lower than the previous bar and off of its low. VSA teaches thatthis is a bar that may have buying within it. Now the next bar is key. It turns out to be a WRB, but the factthat the bar is up means the prior bar MUST of had some buying contained within it.

Now we move to the white WRB itself. Note that this bar creates a zone or range where we get a change inthe supply/demand dynamic. We also know that the market does not like wide spread up bars on ultrahigh volume because of the possibility of hidden selling. In this case, however, the volume actually fellfrom the previous bar and is not ultra high.

We move to the next candle with a double arrow below. This is a doji that closes equal to the previous barand in the upper portion of its range. Volume on this bar is Ultra high. There is SUPPLY in the market at

this stage. Price moves down from here.

Next candle, closes in the upper portion of its range and higher than its open. Volume again is extreme.Here we have Demand showing itself. In other words, Demand is swamping Supply on this bar.SOMETHING HAS CHANGED. Notice that the next bar closes in its middle, has an equal close and volumedrops off.


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The Last bar closes on its high on volume that is less than the previous two bars. Although it does notmake a lower low, this is a 'test' bar. The Smart Money is testing for supply and finds none. Now price ispoised to go up and fill that gap.

Chart analysis by PivotProfiler located here.

Nice Bullish White Hammer pattern.

Note that the white hammer line is inside the range of the Ultra Wide Spread Ultra High Volume candle.

When we take a look at the WRB, we see a down candle that has an ultra wide spread and closes on itslow. There would appear to be heavy selling pressure in this bar. BUT THE NEXT BAR IS UP. If that barwas true selling, then the next bar would not be up.

In fact, if one looks at what price did after that bar it moved up. Clearly, the Professional demand createdan upward drift in price. Simply, that WRB must of been a shift/change in the Supply/Demand dynamics ofthe market.

Now note the large dark Candle just prior to the shaded area. This candle closes on its low , closes lowerthan the previous bar and has volume less than the previous two bars. This is No Selling pressure. Theclose on the low fools the retail trader into seeing weakness. The lack of volume, however, is the realclue.

Price does move down a bit and create the bullish hammer pattern. Note that the hammer line itself is aVSA shakeout/test bar.

This is the "ideal" set-up. We see strength come in using our primary methods (VSA and WRB) and thenwe get a buy signal via our secondary method (Japanese candlestick patterns).

Chart analysis posted by PivotProfilerhere.

First, let's start at the left side. The first bar with the double arrow points to a bar where SUPPLY enteredthe market. The bar is wide, closes up from the previous bar, closes near the low of its range, and hasultra high volume.

If this bar was buying, then why did it close near its low? Many people will see up volume and up close andthink demand. VSA, however, tells us that Weakness comes in on strength and strength comes in onweakness.

Next skip to the next double arrow. Here we have an UP THRUST. This bar makes a higher high, closeshigher than the previous bar, closes in the middle of its range and has high volume. The ProfessionalMoney is trying to get traders to go Long, when the next likely direction is down. They are trying to trickthe retail trader into a bad position. So an UP THRUST is a sign of weakness.

Now we come to the bar in question. We have a narrow range bar that closes up from the previous bar,closes in the middle of its range and has volume less than the previous two bars. YES, THIS IS NODEMAND. If the Smart Money was interested in higher prices, then the volume should not be so small.The narrow range also tells us that the Smart Money is not interested in higher prices. They keep therange narrow because they know the market is weak. The retail trader thinks he is getting a good fill, andthen the floor drops out..........

The last two arrows point to Stopping Volume/climatic action. Wide spread bar with Ultra High volume thatcloses in the upper portion of it range and lower than the previous day. BUT THE NEXT BAR IS UP. If allthat volume represented selling, then the next bar could not be down. Moreover, if all that volume wasselling, then the close should be on the low of the bar, not in the upper portion.


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On an aside, without seeing the open of the bars, It looks like we have a valid white hammer pattern

setting up there. Or at least a Long Shadow that we need to take a closer look at. WRB analysis also tellsus about the change/shift in supply that is happening at this key bar.

[multipage=Smart Money]Pivotprofiler on professional money located here.

Here is a chart of some of today's price action in the Euro.

What is telling here is the actions of Professional Money PRIOR to the news release. We can see whenthey begin to position themselves and on what side through the use of VSA.

Almost an hour beforehand, we see an Ultra Wide Spread Bar with Ultra High Volume, that closes downfrom the previous bar and closes in the middle of its range. This bar represents a transfer of ownership.That is, the Professionals are buying from the retail traders. Why would they be buying prior to a usuallyvolatile news release ? Seems like a risky thing to do. Could they already have an idea of what it will say?

Now VSA tells us that if this is the case, we would expect that if they are BUYING now, they will beSELLING into the release itself for profit taking. Especially If the news spurs the retail traders into enteringthe market on the long side. However, if the retail trader is believes the news to be bearish, they (SmartMoney) would be BUYING more. That is, if the retail traders are getting short, who are they selling to? Sowe should see both Professional selling and buying. We don't expect then to get net short in other words.

Check out the large dark hammer as the news is released. There was some profit taking on that bar. Butthe bar has ultra High volume, closes on its low with the next bar up. Some buying must of taken place aswell. More exactly, they took profits and then began buying as the retail traders (weak hands) rushed inon the short side. We always want to consider "who is on the other side" with VSA. Usually, its the SmartMoney and that is not good. I should say, without VSA it's usually the Smart Money and that is not good.

Note that price did begin to fall for a few bars. But then we get a dark hammer line. The Long Shadow ofthe hammer line happens, not so coincidently, to trade into the region of the First candle mentionedwhere the transfer of ownership begun. The Smart Money is becoming aggressive on the demand side.They are locking in the weak holders (retail shorts) as they know price is going HIGER NOT LOWER. Thedown move and the dark hammer itself may have even pushed some weak longs out.

If you look at a chart beyond the time shown here, you will see the strong up move that ensues.

1. The Smart Money began getting long (long) prior to the News.2. Some used the event to take a bit of profit.3. Most got even more long (demand).

4. Once the weak holders where short, price found support in a such a way as to knock out weak longs

and lock in weak shorts.5. what can not be seen in this picture, is a large inverted white hammer that represents the last effort forthe weak shorts to get out at break even if the bought on the news release itself.

When we use VSA we get a 3 dimensional picture: volume, range and price. Ignoring one of them (likevolume or keeping volume constant) is like cutting off one leg of a tripod...............

[multipage=Squat Bars and Volume Spikes]

Posted by PivotProfiler from this thread.

Another example would be what Bill Williams calls a squat. Basically a squat is a bar with a narrow rangeand higher volume. VSA teaches us to pay attention to a narrow range bar that has higher volume(especially) if it is ultra high and closes in the middle. Essentially, this is just a more specifically definedsquat bar.

Chart posted by Soultraderhere and comments made by PivotProfilerhere.


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Soultrader: "I have a litte trouble understanding volume demand bars after a selloff. I have attached achart from yesterdays action. The rectangle box shows couple sell volume spikes.

My questions is this: How do you watch for demand bars after that spike? In the first rectangle the volumespike is created by a doji. The next price bar closes above the high of the doji... this occurs on lowervolume. How do you intrepret this? To me it seems like supply is cut off but price continues to drop.

The same thing occurs in the second rectangle box. Volume spike is created on a down bar but the next

bar closes above the low of the previous bar.

Any advice would be appreciated."

PivotProfiler: "A couple things to think about. First at the time of the volume spike what was the trend?This is very important. If the trend was up then what we would be looking for is different than if the trendwas down.

Next, are we around a known support/resistance area. These areas are usually respected by Smart

Money. If we are and the trend is down, then we would expect to see demand enter the market, but notnecessarily a change in trend.

After the large volume spike that closes on or near its high, we know that there must of been someProfessional buying going on. Price does indeed move up. But as the trend is down we might expect tosee a narrow range bar with volume less than the previous two that closes up from the previous bar, withthe next bar down-No Demand.

Once you see the spike bar, You begin to look for either No Demand , No Supply, Tests , or Up Thrusts."

More on Squats by PivotProfile posted here.

"A squat is the strongest potential money maker of the four Profitunity windows. Virtually all moves endwith a squat as the high/low bar plus or minus one bar of the same time period........

The squat is the last battle of the bears and the bulls, with lots of buying and selling but little pricemovement (NARROW RANGE). There is almost an equal division between the number and enthusiasm ofboth bear and bulls. A real war is taking place and the equivalent of hand to hand combat is going on in


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the pits..............", Bill Williams, TRADING CHAOS, p.93.

Bill Williams' technical definition of a squat bar is a bar with greater volume than the previous bar anddecreasing MFI (Market Facilitation Index). The short hand definition is, volume greater than the previousbar and a SMALL range than previous bar. As I do not use mathematical formulas, it is the short-handdefinition that I look at.

Tom Williams says that the range of a bar tells us the sentiment of the market makers, the ones who cansee both sides of the market.

For Volume Spread Analysis the story above is off while the bar itself is of note. VSA would say that thevolume is the retail trader rushing into the market. The spread is narrow because as the retail rushes in tobuy, for example, there is a substantial amount of Supply from the professional to a meet that demand.Because the market makers see resting orders to sell from the smart money, they have a differentperceived value of the stock/index/currency. This perception of value is such that they are willing to keepthe spread narrow as they see expect prices to fall. If they, the market makers, were in fact bullish, theywould increase the spread, not let retail traders come in and get "good fills".

Simply put, as volume increases the range of the bar should increase as well. If the range is decreasing,something most be going on underneath. What is going on underneath is either Supply swampingDemand or Demand swamping Supply. This often happens at Market tops or bottoms (like Bill said).

We are yet again at situation where we see two different methods coming to the same conclusion. Tomnever mentions squat bars, but he talks about narrow spread bars on high volume (p.77 for one-whendiscussing market tops.)

A squat and a test are not related, but could be the same bar. A test that has a narrower range than theprevious bar and has higher volume is by the short hand definition a squat. An UpThrust might also be asquat. Note that at potential turning points as defined by VSA: Tests, UpThrusts, we have the potential fora squat. Which as stated above often come at plus or minus one bar from said turn.

To be sure, not all squats are turning points and not all turning points have a squat. Generally speaking,

the higher the volume the more likely the squat will be a market turning point.

PivotProfiler on Narrow Spreads & High Volume (Squat) located here.

" This is very simple to see. The public and others have rushed into the market, buying before they missfurther price rises. The Professional Money has taken the opportunity to sell to them. This action will bereflected on your chart as a narrow spread with high volume on an up-day. If the bar closes on the high,this is an even weaker signal.........." Tom Williams, Master the Markets, P. 77.

Just wanted to show something a bit different.

A few caveats:

* As previously mentioned, Not a good idea to enter trades after 1300 and certainly not after 1400.

* The above is even more so the case on a Friday.

What I wanted to show here was the narrow range bar on high to Ultra high volume. Of course, this is thetype of bar where WRB & Long Shadow Analysis skips over. VSA, however, does not.

Again, the over-arching concept remains the same. We would be looking to see some type of entry signalwithin the body of a significant WRB or Long Shadow. What happens here is after an effort to rise we seea No Demand bar. This bar closes on its high and has volume less than the previous two bars. The verynext bar has a narrow range, closes on its high and has greater volume than the previous bar. THIS IS ASQUAT. The above quote tells us the importance of the close on the high with this type of narrow rangehigh volume bar: Weakness.


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So if we step back, we have just seen a No Demand bar. Which tells us the Smart Money is not yetinterested in higher prices. The next bar we see has a compressed range on higher volume that closes onits high and closes equal to the previous bar.

"..So by simple observation of the spread of the bar, we can read the sentiment of the market-makers, theopinion of those who can see both sides of the market.", Master the Markets, P.28.

Some may note the No Demand signal a few bars earlier. This would be a good place to short if we werenot in a naturally low volume period. More over, the reason this short could be considered is because of

the Ultra High Volume seen as an effort to rise. Then the following No Demand/Squat sequence. Simply,volume as a whole increased during this time so while the time of day remains a reason not to enter, thelack of volume doesn't.

What is important here though is the idea of the narrow range bar (narrower than the previous bar) onhigh volume, which is higher than the previous bar. In other words, the squat; Bill W illiams' term, not VSA'sterm.

[multipage=VSA and WRB's]

Commentary posted by PivotProfiler located here.

VSA and WRB & Long Shadow analysis are the primary methods and are used to understand thecontextual backdrop thru which a candlestick pattern trade can be taken.

Take a look at the chart below.

We see a WRB on Ultra High Volume. VSA tells us that markets do not like Wide Spread up bars on UltraHigh Volume. Because there could be hidden selling in the bar.

Now check out the very next bar. This bar has almost as much volume as the WRB, in fact it has 3 ticksless. BUT the range is much more narrow and the bar closes in the middle of its range. This is a transfer

of ownership bar. The Smart Money is dumping supply into the market. As retail traders rush in to getlong, the Smart Money is all too happy to sell to them. Like I said, we need to always be aware of who ison the other side of the trade.

While this bar is up, on high volume it is not "up volume". Most volume indicators and volume analysiswould assume it is positive. But we know better than that.

A few bars later, we see a narrow bar that close up from the previous bar and closes in the upper portionof its range, but on volume less than the previous two bars. This is No Demand. Professionals are notinterested in higher prices at this time.

At this point we have context. Supply has entered the market. Note that price overall begins to move

sideways.

There are some who would go short after the No Demand with the background selling that can be seen.This is a personal choice. For me, all that the context says is, "now is not the time to be going long". Ineed to see some candle pattern, preferably within the range of the WRB, to get me short. (if you look ata chart from today, you will see that price plummeted after the jobs report). But my point is this, thecontext, or story, at this time says more about NOT going long than simply get short.

More chart examples provided by PivotProfilerhere.

BEFORE & AFTER:

I have attached two charts. The first is the before and the second is the after.

Let's look at the before.


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For me the key concept comes thru at least a basic understanding of WRBs. Of course, VSA doesn't lookat the open, but I think much is missed if you don't. More over, I think that if VSA did, they would come tothe same conclusion. And in fact, they DO come to the same conclusion partially when dealing with widespread bars (more on this later).

The first bar with the double arrow is a wide spread bar that closes in the middle on ultra high volume.Supply enters the market on this bar. Not a place to go short. The reason: the reason is explained in thenext highlighted bars.

The next bar we have is a Long Shadow and in VSA terms, it is Ultra Wide Spread bar on high volume,that closes lower than the previous bar, and closes in the upper portion of the range. DEMAND enteredthe market on this bar. Now, here is where I depart from VSA. We now have a Long Shadow that creates asupport/resistance zone. We also see that this Long Shadow tells us that demand overcame supply onthe lower portion of the bar. Not to mention, this bar is a Doji (close=open). VSA does not care that it is adoji, yet the conclusion that something is changing in the supply/demand dynamic is the same-Buyerscame in on this bar.

Still not the bar to get into the market on. The next key bar is a WRB. WRBs also tell us of shifts orchanges in supply and demand. Then we get a No Demand bar. Again not a bar to enter on. What weneed to see is something happen within the RANGE of the WRB AND OR THE RANGE OF THE SHADOWOF THE LONG SHADOW BAR.

Ideally, the market will move back down and give us a No Supply or Test within these ranges. Then weshould be looking to go long. And that concept is what Todd does not say much about. Clearly, he wouldnot talk about within the context of the WRB because he does not look at the open, but he can talk aboutthe overall range of the Ultra Wide Spread bar. In other words, even though he would not know it is aLong Shadow, he would recognize the bar as Ultra Wide Spread and thus should be used as a matrix tomeasure what comes.

The next chart is the AFTER.

We do indeed get the No Supply sign in the range of the WRB and the Long Shadow candle. Once wehave the confirmation bar up, the next bar, we get long at the close of that bar/open of the next bar.

Note that there are two gaps and gaps are usually filled so we need to keep that in mind.

Further continuation on the previous commentary provided by PivotProfilerhere.

After the up move in price what happens next?

There is on thing we want to keep in mind; we had a couple of Gaps on the way up. Gaps are usuallyfilled. They can at times, however, act as support and resistance areas......

Let's look at the what happens when a test fails.

The first thing you will notice is a WRB. Not important to VSA but oh so telling to the rest of us. The bestplaces to see tests, upthrusts, and no supply/no demand bars are within the body of a WRB or shadow ofa Long Shadow candle.

We have our WRB in place. This creates a natural support/resistance zone. Next we see a narrow bar that

closes near its high, closes equal to the previous bar, and has Ultra High volume. THIS IS A HIGHVOLUME TEST. Smart money is looking for sellers and is finding some. While it is true that sometimes themarket goes up on high test, it usually does not go up far and then comes back down to re-test the area.

As always the next 1 or 2 bars need to be considered. To actually confirm the test we need to see one ofthe next 2 bars close Higher than the close of the test. Otherwise, we have a failed test. Notice what


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happens here. The next bar is down and then the bar after that is an up bar but closes equal to the closeof the test bar. Now, look at the next bar. We have an up bar that closes in the middle to slightly up onrelatively high volume. It is not as high as the test, but it is still high.

Up close (from previous bar), on high volume closing near the middle: This is supply entering the market.At this point, we have a FAILED test on high volume and more supply showing up. The very next barcloses on the high with volume less than the previous two bars and closes higher than the previous bar.This is no buying pressure. As it would happen, the high of this bar is equal to the close of the WRB. TGWONT TELL YOU THIS. Then we get the next bar down. From a VSA point of view, now is the time to go

short.

* the test of supply has failed.* New supply entered.* No buying pressure.

couple that with the fact that there are gaps below and all this is happening at the low of the S/R zone of aWRB.

Now let's take a look at a test that does not fail. I would first point out that from a time of day perspective,this is not an ideal time to be entering a trade.

It all starts with a WRB.

We have an Ultra Wide Spread bar on Ultra High Volume that closes on the low. But the next bar is up. Ifthis bar is up then there must of been some buying in the previous Ultra Wide Spread bar. WRB analysistells us that changes and shifts in supply/demand occur in WRBs. More reasons to think something isindeed going on.

3 candles later, we see a narrow range candle that closes on its high, makes a lower low and has volumeless than the previous two bars. THIS IS A TEST. Technically a possible test, as we do not have aconfirmation bar yet.

Confirmation comes 2 bars later when we see an up bar that closes higher than the close of the test bar.First possible entry point, with no regard to time of day. If you missed that point there is another. W e get abar that closes on its low, has a narrow range, has volume less than the previous two bars, with the nextbar up. THIS IS NO SELLING PRESSURE/NO SUPPLY.

What is nice about this bar is the volume. While the test volume was lower than the previous two bars, itwas not as low as the volume on this bar. More evidence of the lack of sellers underneath. Also note thatwe are within the range of the WRB as on this bar. So we have a second chance entry which may in factbe the most ideal entry of all for some (leaving time of day out of the equation).

Back to the test candle. Some may note a hammer line that appears to traverse into a bullish whitehammer pattern. It does not. But if you had mistaken it as such, here too, time of day should have kept

you out.

WRB analysis provided by PivotProfile here.

Not all WRBs are created equal. While there may be many factors in what constitutes a significant WRB,the three main are:

* Size in relation to other WRBs* Amount of volume* If the WRB is the result of some news related event

NihabaAshi is the true WRB expert and may be able to enlighten us as to some of the more reasons thatdetermine a WRB's significant.

As I know you are looking at VSA, don't let what I just said about WRBs confuse you. There are three


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factors that constitute significant bars in VSA as well:

* Size in relation to other wide spread bars* Amount of volume* If the wide spread bar is the result of some news related event

Now in the chart below we see numerous WRBs or wide to Ultra wide spread bars. However, they are allnot equal.

Let's just focus on the very first one on the left hand side of the chart. We see an Ultra Wide Spread barwith Ultra High Volume that closes up from the previous bar. VSA teaches us that markets do not like UltraWide Spread or Wide Spread bars on high or Ultra high volume. Because they could hide selling (supply)within them. Although some times they are indeed strength. Which by the way, much time is spent on inthe bootcamp. Because many people after hearing weakness (supply) comes in on up bars automaticallyassume all up bars are weak.

We know this bar had some selling (supply) once we see that the next bar is down. If all that volume wasbuying (demand) then the next bar could not be down.

What we often see next, if the market is strong, is either a No Supply or Test for supply bar. Here we seea test. This is a low volume test. Note that volume is less than the previous two bars. Note that the testmakes a lower low than the previous bar and closes on its high. It hard for me to separate some things, soI must point out that this test bar is in body of the WRB. But from a pure VSA point, note that the test iswithin the range of the Ultra Wide Spread bar. SIMPLY, A LOW VOLUME SIGNAL WITHIN THE RANGE OFA PRVIOUSLY HIGH VOLUME BAR.

Many concepts in VSA are logical. Here we see some supply enter the market. The next thing we see is atest of supply. The Professional want to take prices up, but are making sure that the supply is out of themarket. If there were sellers underneath, then there would be more volume. And if a large amount ofsupply had entered (more than the demand present) then price would go down on more volume.

The key(s) here are that the 'test' comes immediately after we see supply enter the market showing us

market strength. Or, simply put, location and background information. An aggressive trader might enteronce the test is "proven" on the next bar that closes higher than the close of the test. Shown here. Thereason for the question mark is that not everyone would enter at this point. Some use multiple timeframes,some use price action patterns, and some even use indicators ( ).

To be sure, the market did indeed move up and a quick profit could have been made. In fact, one couldstill be long as of this pic and in profit using only one timeframe and that repeatable and reliable pattern.

Once you witness Ultra Wide or Wide Spread bars on High or Ultra High Volume, you want to then startlooking for bars with low volume. This is where you find no supply, no demand, and some test bars.Sometimes there will be high volume tests or Upthrusts on high volume. An Upthrust is kind of like a highvolume test but showing weakness rather than strength. That is, a high volume test will close on or near

its high and an Upthrust closes on or near its low. Ideally a high volume test will make a lower low while theUpthrust will make a higher high.

There is a lot more here, but it is enough to say that every No Supply or No Selling Pressure sign in thispic is within the range of a significant Wide or Ultra Wide Spread bar. More precisely, within the body of asignificant WRB.

Chart explanation by PivotProfiler located here.

Primary methods:

1. Volume Spread Analysis

2. WRB & Long Shadow Analysis


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We trade right by first looking left.

First we look at the higher time frame. Markets are fractal and the higher frame dominates the lower one.

The 15 min chart . As previously stated, the start of the day should be at 0200 New York time according toMark Fisher. This is when London trading begins.

Notice that we see a squat. A narrow range candle (narrower than previous candle) with volume greater

than the previous bar. Supply is entering on this candle. At 0400 hrs we get a No Demand sign. At thispoint we have seen a squat and a dark inverted hammer with a Long Shadow. Supply is entering andvolume is less on up candles.

At 0430 we see another No Demand sign. It is a good guess that there are no buyers in the market. IfProfessional money is not buying (supporting) then the path of least resistance is down.

Jump over to the 5 min.

The fist significant candle is the Effort to Fall candle just after the No Demand candle. Note that we see atest candle after this WRB, which is also an effort to fall candle. While the volume on the test is low, wehave not seen strength on the 15. No reason to be looking to go long.

The next candle is up on Ultra High Volume. Markets do not like up bars on high to ultra high volume.Indeed, supply entered the market on this bar. But we now have our WRB that creates aSupport/Resistance zone. This is where we would like to see an entry signal. Preferably a low volumesignal where there was once high volume. Or a high volume (squat) or UpThrust.

AT 0435 we see a narrow range bar that closes up on volume less than the previous two bars. This is NoDemand. We have seen Weakness on the 15 min chart and now we are getting No Demand on the 5 min.Even though there is no "vsa indicator" we are reading the candles and see our entry.

We note that this No Demand is both within the body of the large white WRB and within the body of the

Effort to Fall candle. If the Smart money was trying to push prices down around this area (range), then it isa good sign (of weakness) to see little volume on a candle in the opposite direction within that range.

Posted by PivotProfilerhere.

My definition of a WRB is a candle (or bar) with a body (Open -Close) larger than the previous 3 candles.Hence there are 4 candles(bars) in the definition, not 3. While the amount of candles used in thedefinition can be changed to 4 or 5, 3 should be the minimum amount. This is the definition used by theman who pioneered this concept, NihabaAshi.

The only thing I see as a potential problem with your definition is that it is hard to SEE that a candle(bar)is a certain standard deviation wider than other candles. That is to say, the traditional way is more Visual

and thus more adaptable when one is watching multiple markets/charts.

I also think you can miss a great deal of what is going on as the WRB does not have to be a set amountlarger than the previous 3 candles, only on handle(pip/tick) larger. While the more significant WRBs tendto be large, they do not need to be.

Mark would tell you that WRBs represent, among other things, volatility changes in the market. Sometimesthat change or shift is subtle (think of three dojis followed by a candle with the open 1 pip below the close-a dark WRB by definition). In this case the WRB is not large and not all that important, but it is expected.As we would expect to see increased volatility after a period of little or no volatility. Volatility here ofdefined by the size of the body.

[multipage=Chart Examples Part 2]Chart analysis provided by PivotProfilerhere.


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The first thing to note is the wide spread ultra high volume bar. You labeled it stopping volume. I think it iseither stopping volume or a volume climax. More important than the name, however, is the fact that achange in the supply/demand dynamic happened on that bar. The bar is wide with ultra high volume,closed lower than the previous bar, and closed near the high of its range. CLEARLY THERE WASBUYING (DEMAND) ON THIS BAR. This created a gap which was filled.

I veer off the VSA path a bit to mention that this is a Wide Range Body. Note where the open is (notlooked at in VSA, but so telling). Ironically, I think this is an advanced VSA concept despite that they do

not look at the open. In other words, if they did look at it, they would logically come to the conclusion W RBanalysis comes to. Not to get too far into this, but what I like to see is a set-up (entry signal) happen withinthe range of the body or the total range of the bar of this ultra wide spread bar. I believe Todd, and Tomwould agree with the total range aspect and thus it is more advanced VSA, and not talked about in publicforums(webinars) by Todd.

At any rate, we then get a No Supply bar. The bar closes near its low, has a narrow range as compared tothe previous bar, closes lower than the previous bar and has volume less than the previous two bars.

You are correct about the test. That is indeed a test of supply that closes in the middle of its range,makes a lower low than previous bar, closes lower than the previous bar. Volume is higher than theprevious bar but relatively low.

The bar you labeled as No Supply is incorrect. The volume is not less than the previous two bars.However, the next bar is No Demand. Note that we are at the bottom of the support/resistance zone viathe body of that large candle. With a No Demand indication, the Professional Money has to re-test forsupply underneath. We thus get another test bar. Here what is of note is the fact that volume here is lessthan the volume on the first test. This is a sign of market strength.

Note the shaded area. There is something going on here that is beyond the scope of this thread. Sufficeto say, there is reason to expect price to move back into this area. But even without that concept, onewould be looking for a move back to "test" the close of that large Ultra W ide Spread bar.

How and where you actually enter the market is another question altogether............... That is, it is apersonal decision. But the pattern of a No Supply followed by a test, followed by a No Demand, followedby another test on less volume than the first test and with a low less than the first test, is a repeatablepattern.

Chart analysis provide d by PivotProfiler located here.

Notice that we have a valid High Close Doji pattern.

This pattern appears within the body of the WRB and the following Ultra Wide Spread bar with Ultra High

volume. Take a look at the test bar.

VSA tells us that a test bar is when Professional Money "mark" prices down to see if there are is anysupply (sellers). VSA, however, does not look at the open of the bar. But look at what we see if we do.First, we see that this bar is a doji. In candlestick terms this bar represents indecision. More over, theclose on the top means price was rejected as it moved down. This is not unlike what VSA tells us.

When we look at the entire bar, what must be the way the bar played out? The bar opened up, went downand the price came up to close right where it opened. Clearly, we can see that Professional Money"marked-down" the price only to take it back up again. In this case, we have a "perfect" example of thetrue intentions of the Smart Money. If the open had been lower on the bar, we would of course still have atest, but the picture would be different. For example, if the open was at the low of the bar, we would stillhave a test, but we would not get a sense of the "mark-down".

Note that the other labeled test candle opens in the middle and closes on its high. We do see the action(mark down-price rejection) here as well.


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To be clear, tests come in various forms and the key is the volume and the close. But some tests aremore reliable than others. Volume plays a role here but so does the open. Tests that are also dojis tendto be the optimal type of tests. To those that use candles, this makes sense. Hammers with long shadowsalso make ideal test bars.

Two methods reaching like conclusions.

It should be pointed out that a test bar needs confirmation. Ideally that confirmation comes on the next barwith a close higher than the close of the close of the test bar. If that confirmation bar closes higher than

the high of the test bar and it (the test bar) is a doji, well, now we have something..............

Chart analysis provided by PivotProfilerhere.

Very interesting chart here.

I makes these posts to help me learn as much as anybody else. I am really starting to see the relationshipbetween High/Ultra High Volume areas and subsequent Low Volume signs within that area. If I had anydoubt about the importance of volume, I certainly don't now.

Many of the charts are repetitive but there are two main reasons for that:

1. Theses things repeat day after day and on all timeframes.

2. Pattern recognition.

At any rate, here is a really cool chart with much of the same AND a new twist.

First, we see a down dark candle line on Ultra High Volume. But the next bar is up. Therefore there mustof been some demand (buying) on that dark candle line. That next up bar, in fact, has even more volumeand closes off its highs. We know that the market does not like wide spread candles on High or Ultra High

Volume. At this point, we also have a white (close>open) WRB. Thus by extension, we have aSupport/Resistance zone. Remember, WRBs represent changes or shifts in the supply/demand dynamicsin the market.

The bar following this WRB is up, but the volume is less than the previous two candles and the range hasnarrowed. The candle following the No Demand is down. Now we can see that the WRB did indeed havesome supply in it. (while this is after the fact, if we step back and look at what price did following the WRBis move sideways. Which means there must of been supply entering on the WRB. But this after the factnotion only confirms what we see during the fact.)

Note that the bar following the No Demand is itself a No Supply bar. The volume is less than the previoustwo candles with price closing lower than the previous bar. On the very next candle we see a test. This

test, however, is not a low volume test but rather a higher volume test. As usual, we look for theconfirmation of the test to come one to two bars later. Here it does indeed come on the next bar. But thisnext bar is also a No Demand bar. It has a smaller range, closes higher, and has volume less than theprevious two candles. At this point I would depart from VSA just to note that this is not a High Close Doji asthe close is equal to the high of the doji, not higher.

Before going into this bar a bit more from a VSA perspective, let's jump ahead two more candles. W e seea narrow bar that makes a lower low, closes in its upper portion on lower volume This is a test. KEYTHINGS:

1. This second test has a narrower range than the first test.

2. This second test has less volume than the first test.

3. This second test does not make a lower low than the first test.

4. This second test comes within the range of a high volume candle, more specifically, within the body of


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What neither of us mentioned was something NihabaAshi is a proponent of: a Contingency plan. Basically,a contingency plan is a price action pattern used to tell you something has changed and the prior signal isno longer valid. Once this pattern appears, a long is reversed into a short. Note this is different than asimple stop and reverse procedure as it is possible for the contingency plan to be triggered before one'sinitial stop is hit.

If you are interested in contingency plans, NihabaAshi is the one to talk to.

What this chart shows is based on the concept however.

First we see a good test. The volume is not low, but it is not high either. It is confirmed on the next bar witha close up. This is where you go Long. My stop would be just under the low of the test bar.

Note what happens next. price moves down and a dark WRB is formed. From that point, another testcandle appears. On this test, the volume is lower than the first test, and the candle is at the same rangeof the first test. Again, this test is confirmed on the next bar. Two bars later, we see a No Demand sign.Not a good sign for the longs.

This No Demand is completely within the bodies of Two WRBs (hint).

But the bar that confirms the no demand sign is key. It is another large dark WRB. What is most importantis that this candle (Dark WRB) closes below both test candles' lows. A dark WRB closing below the low ofthe test candle should trigger a trader to at least re-evaluate the long position. Note here that it wouldhave stopped many traders out, but not all.

With the appearance of a No Demand and a dark WRB that closes lower than the low(s) of the testcandle(s), we have no doubt that we are seeing No Result from a Test. Our contingency plan would thusbe triggered and a short is placed on the next bar. Again, understand, these are not failed tests, they aregood test with no results. Simply, we have negative action.

Negative Action: "If you observe a positive indication, but you do not observe the expected results, thenwe refer to this as 'negative action'...." P. 152

[multipage=Narrow Range Bars]Question posted by Gordon G here and replied byPivotProfilerhere.

Gordon G: Hi PivotProfiler, As regards Ultra Wide Spread Bar and the search for signals within its range,do you think it is worth considering also entries within narrow spread bars with ultra high volume ? Thanks

PivotProfiler: Narrow range bars with Ultra High Volume are very important. However, with a narrow rangebar it is less likely that a signal with appear within its range. That is, because the bar IS narrow, it is"harder" for a signal to appear within its range. Of course that depends on how narrow the range actuallyis.

It is better if the narrow range bar comes within the range of a WRB or Long Shadow.

But if a low volume signal does appear within the range of a narrow bar with Ultra High Volume, it is surelyworth taking. (as long as everything else is in alignment).

Chart explanation provided by PivotProfilerhere.

As this thread is VSA, I will not say much about the Low Close Doji pattern, but it too signals a short entry.I would say that the pattern happens where we would want it to be: within the range of a W RB.

Fist let's start with the 15 min. Notice the Effort to fall sign followed by a No Demand. See how the NoDemand is within the range of the Effort candle. This is a sign of weakness.

Next, we see a narrow range bar with increased volume: a squat.


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At this time we now have seen supply enter the market and some downwards price action that will make uspredisposed to be short on the trading chart.

The trading chart.

First Note the large white WRB. This sets-up the support/resistance zone. As I must apparently repeatthings, we want to see something happen within the range of this candle.

Price trades higher after that white WRB on high volume, but the range of the bar narrows, so we know

that there was some supply (selling) in the high volume WRB.

Now the key bar. A dark WRB (although smaller than the white WRB) appears. WRB: body greater thanthe three (3) prior intervals. This WRB happens to be "effort to fall". In other words, the Smart Moneywants to take prices down.

Note that we then get a No Demand bar within the range of this dark WRB and within the range of thelarge White WRB. Time to get short. Upside weakness where the market previous showed downsidestrength.

If you missed that, There is a doji that also happens to be an Upthrust 3 bars later. Get short. Weaknessin the background and an UpThrust a classic short signal. Did I mention that the Upthrust is within thebody of the WRB? (well, the one's I favor would usually be)

[multipage=Chart Examples Part 3]Chart explanation by Z_Trade located here in reply to idaxtrader's question located here.

idaxtrader: A few months back a came across Mr. Williams first book Undeclared secerets and ever since Ihave been hooked on V.S.A. My first question is it necessary to read his more current book or is theoriginal one good enough?

My second question stems from a recent trade that resulted in a stop out for me. I have included the chartto illustarte the point of how I was tricked by the volume on the ES. My question is this what are the

objective ways that V.S.A. can help identify a bar as hidden supply?

In the book he stated if I'm correct that it should be determined as hidden supply if the bar closes in themiddle of the range, has enormous volume, a climax typer of bar, or the next bar is down right after animportant bar with spread,or the next bar is level then the following bar is down.

In the instance where I was stopped out. The next bar was level right after a breakout. But before a downbar took place there was a follow through up bar. It is apparent that I should have been very alert forhidden supply since right after the break the next bar was level. But in actual practice with the market thebar following a break is often level on good signals.

I thank everyone again for this thread and I really hope someone can shed

some light on the possible ways to determine hidden supply in a up bar.


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Z_trade: I marked your chart to illustrate pretty simple concept. Price revisited supply area where markethas spent some time on the way down. Short entry can be taken on the very next candle after narrowrange low volume green /up/ candle.

hdcafe's reply to the same thread located here.

A few things to look for here some VSA some not.

A) Your trade took place during lunch time trading 11:30 to 12:30 when volume becomes relatively light.B) The WRB just after 11:30 has no follow thru (lunch time trade?) This tends to cause the shorts to covertheir positions prematurely which is what stopped out your trade.C) You have to consider the WRB with ultra high volume to be a sign of strength whether it truly is or notand once that occurs you then have to get a strong sign of weakness to take a short posistion. That signdoes not come until the upthrust occurs at 1:00

I am sure you are fully aware of this but I will comment anyway. When trading the futures markets IMHO itpays NOT to use the terms "Supply and Demand". With futures, the supply is unlimited and demand isnot. I prefer to use the terms "Willing Buyers and Willing Sellers". This reminds me that the Smart Moneyhas to be searching for signs of what other traders are willing to do and not do rather than searching forthe availability of a limited amount of stock. This makes the futures market that much more of mind game.


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It appears that you are using a 2 minute chart here. That is alot of noise to have to filter thru especially

with the ES. I use a 5 minute chart on the ES and then use 3 and 4 minute charts to back up the 5 minute.Sometimes the VSA bars will be more recognizeable in different time frames. This also helps with volumechanges during different times of the day.

The high just before 12:30 is also an upthrust but a weak one and you could have taken the trade at theclose of the down bar. I would have waited and taken the trade at the 1:00 upthrust.

Pivotprofilers reply located here.

* On the bar itself:

1. Closing in the middle on Ultra High Volume is a good sign of supply within the Upbar. As is closing onthe low.

2. If volume is too excessive, there is a good chance that supply is swamping demand.

*the real keys come in the next bar:

1. If we see Ultra High Volume on an Up bar that closes off its highs and the next bar is down. There mustof been some selling (supply) in that first bar.

2. If the bar closes on its high but the next bar is down, again, some selling in the first bar.

3. If next bar is up, but the range narrows and the close is in the middle or low, there was selling (supply)in the first bar. Why else would this bar have a reluctance to go up? Reluctance is demonstrated bynarrow range and middle to low close.

Also look for tops to the left. If price is trading into new ground, then there may be supply contained withinthe bar. IF, however, there are tops to the left, or places where supply previously entered, then thevolume may mean the Smart Money is willing to absorb the supply.

Chart posted by walterw here.

[multipage=Through the Looking Glass]Topic covered by PivotProfiler located here.


24/38

Beautiful chart to post on what one should be seeing when he/she looks at the market through the prismof Volume Spread Analysis and WRB analysis.

In my opinion every trader should have a "story". That is, a reason "why" price does what it does. "Why"certain players behave in certain ways. "How" the players are. "What" an overbought reading on the RSImeans.

VSA has a story. I believe in that story.

Let's take a look at how the story placed out last week. This chart is from Friday before the Payroll report.

The first thing to see is an Effort to Fall bar on the left side of the chart. VSA's story tells us that effortrepresent professional money trying to move price either up or down. This bar is also a WRB. I havemelded the concepts of effort from VSA with WRBs.

Now, WRB analysis tells us that a WRB represents a change/shift in supply/demand among other things.Therefore if there has been a shift in supply/demand it is to the downside-an effort to take the market

lower would mean adding supply to the market.

Okay, we need on more thing. Professional money is not sitting around a large table in a smoke-filledroom saying " Let's try and take price down on the retail trader in 10 minutes.......". No some Professionalmoney will want to go long and some may want to go short at certain price levels. So we see thecumulative actions in price and volume. Of course, those professionals that went short (for example whenprice rises) also see what is going on and are usually quicker than the retail trader to 1. admit they arewrong 2. get out 3.get long.

Okay now let's skip to the squat bar. Bill Williams tells a good story about what this bar means. It is ,however not quite correct. Our story is that the narrow range means that the market makers are keepingthe spread narrow because they have a particular perception of value. In this case they are bullish. Hence

they are willing to buy from the sellers entering. These traders thing they are getting a good price but failto wonder why. Note what happened. Range narrowed, Volume increased on a bar that made a lower lowand not a higher high (Selling Bar). However, this bar is not weakness rather strength. The market goesup.

Take a quick look at the first effort bar. We do not close above the High of this Effort to Fall bar. Simply,the high is being supported on a closing basis.

Let's skip to the first No Demand bar. This is an Ideal place to go short. It represents a low volume signalwithin the range of a High volume candle. Now think about the story. Supply/traders rushed in an attempt(effort) to take prices down. Price went down a bit but now has made its way back up. If volume is low thatmust mean one of two things:

1. All the traders that went short are still bearish. If they were not and their stops were being hit, volumeshould be high.

2. No rush of new bulls is taking place at this time.

Again, think about what an Effort bar means. Professional money came in at a certain area with someresolve to move price down. Low volume up bars in this area should therefore be bearish: the highvolume represent a desire to move price one way, the low volume should show the opposite. That is, nodesire.

Now let's move to the next No Demand bar. Another nice entry/add on point. Note that we again have lowvolume in the area of previously High volume. That high volume in fact, is on an Effort to rise candle.Same as an effort to fall, just in the opposite direction. The story changes slightly.

This time we see traders willing to step in and buy the market, which results in the Effort to rise bar. Yet,price moves down. THIS IS NO RESULT FROM EFFORT. So we see no result from the effort to rise, but


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are seeing result form the effort to fall. Then we get an Up bar on low volume (second No Demand).Volume on an up bar is falling. Those who wanted to take price higher have lost their resolve to do so.

Think about it. In this price area (range) bulls stepped in. But now in this same level they seem to benowhere. This must be a bearish sign.

One quick note: we could also see Upthurst or Squats in the area of previously high volume. These twoare usually higher volume themselves, but there is a logical and consistent story here too. This chart doesnot show them. It shows the low volume sign within the range of previously high volume. Moreover, that

low volume sign is within the body of a WRB......

[multipage=High Volume Bars]Pivotprofiler on high volume bars located here .

1. Okay, assume the High volume is the retail trader, or dumb money. Now the real questions is this: WHOIS SELLING TO THEM?

2. You do not want to "believe" in Professional money, fine. But Does there seem to be a group that is onthe correct side of a trade more often than not? When volume is high at a top or bottom, somebody wasdoing the selling (at the top) and the buying (at the bottom).

VSA seeks to emulate the traders that tend to be on the right side more than on the wrong one. Yet, inthe book, Master the Markets, Tom Williams clearly says that some professional are wrong more than theyare right. What separates them from the masses is their ability to admit they are wrong and get out of abad position. They do not hope the market will turn in their favor. They do not curse their indicators (andmost don't use any) when they are wrong, the simply reverse their positions.

3. VSA contends that 85% of a volume histogram is professional money. This is the one thing that I callthe "leap of faith". Either you believe or you do not. But once you do, that means ALL volume bars are85% professional money, even the small ones during the none regular trading hours.

4. Most traders have some idea of what the Smart Money is. One does not have to be specifically talking

about trading syndicates to find value in the VSA story.

More comments posted here by PivotProfiler.

VSA teaches that the market does not like high volume upbars. Why? Because there could be HIDDENselling within that bar. Note that the next bar is down. Why? Becuase there was supply dumped on themarket. The Pros were selling not buying............

I do not mean to sound harsh. But it the basic premise of VSA that WEAKNESS comes in on up bars andSTRENGTH comes in on down bars. Simply, if you were looking for more upside, then you, not the pros,were wrong.

P.s. Professional money is not professional money because it is never wrong........... It is professionalmoney because it is BETTER at being wrong.

[multipage=Pushing Through Supply]Charts posted by notouch followed by commentary byPivotProfiler locatedhere.

notouch: Here are a couple of charts showing how VSA is great with hindsight but not so great in real timetrading.

I don't think VSA is worthless on a 5 minute chart but I don't think you can point at high volume and say"that's Professional Money!". We really have no idea who or what is behind a volume spike from one 5minute period to the next. The 5 minute charts are useful if you're looking for the perfect entry but you're

getting your directional bias from the 15 minute charts. That's why I think multi timeframing is an importantpart of VSA.

I don't think it's necessary to try and identify who is behind a volume spike. The important thing is torecognise that reversals occur on high volume around support and resistance areas.


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PivotProfiler: The first thing I see on this chart are two small tops to the left that represent supply. Hence

the large candle with Ultra High volume could be "Pushing thru supply". That means the volume isabsorption volume as the smart money is willing to buy at higher prices. If they are willing to buy at higherprices, they must expect even higher prices.

As you have said, one timeframe is usually not enough for proper analysis.

[multipage=Strong Holders vs Weak Holders]Thread by PivotProfiler located here.

There are a few key questions a trader needs to be able to answer:

* Why do we have Bull Markets?* Why do we have Bear Markets?

* Why do markets sometimes trend strongly?* Why do markets sometimes run sideways?

STRONG HOLDERS

Strong holders are usually those traders who have not allowed themselves to be trapped into a poortrading situation. They are happy with their position, and they will not be shaken out on a sudden downmove, or sucked into the market at or near the top. Strong holders are strong because they are tradingon the rightside of the market.

WEAK HOLDERS

Weak holders are those traders who have allowed themselves to be 'locked-in' as the market movesagainst them, and are hoping and praying that the market will soon move back to their price level.

These traders are liable to be "shaken-out" on any sudden moves or bad news. Generally, weak holderswill find that they are trading on the wrong side of the market, and are therefore immediately underpressure if price turns against them.


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* A BULL MARKET occurs when there has been a substantial transfer of stock from Weak holders toStrong holders, generally, at a loss to the weak holders. (accumulation)

* A BEAR MARKET occurs when there has been a substantial transfer of stock from Strong holders toWeak holders, generally, at a profit to the Strong holders. (distribution)

It is about Supply and Demand. Volume represents little more than activity.

Forget about the 85% number. Volume Spread Analysis is not a house of cards built on the foundation ofthis notion.

What you need to understand is:

A. There is a group of traders that are consistently among the Strong holders. And because of that, theytend to trade with more size.

B. Large-sized Strong holders leave tracks:-- When Volume is high, it is telling.-- When volume is low it is still telling; when volume is low, nothing is being done, and that is telling.

C. Even when one attributes large volume to the retail trader (usually Weak holders), one must considerwho is taking the other side of the transaction. If it were other retail traders, then 90% of all retail traderswouldn't fail.

There is little doubt that there is a group of traders who are consistently among the Strong Holders.Whether they are syndicate traders, hedge funds, pension funds, or banks matters little.

Whether any single individual amongst the group is always right, matters even less.

[multipage=Chart Examples Part 4]Original chart posted by Tasuki here and replied byPivotProfilerhere.

Tasuki: See attached 15 minute ES chart from today and yesterday.

Just a short question on "no demand". I seem to see it every time the market starts going up, which can'tbe right, so if somebody would kindly straighten me out and show me which (if any) of my putative "nodemand" bars are the real McCoy, I'd be most grateful.

PivotProfiler: Hi. Thank you for posting.

Let's start with the most basic definition of no demand:

An up-bar with a narrower range than the previous bar and volume less than the previous two


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volume bars.

I have pointed to three such situations.

Now, there are at least two more things to consider that the basic definition does not;

* Price: We would like to see the close in the High, middle or low of the bar. Tradeguider uses only themiddle and low in its definition.

* Confirming action: Is the next bar down. This is tricky and a sticking point for some. The next bar downconfirms the sign, but again, by definition the sign does not need confirmation from the next bar. TG waitsfor confirmation before placing a sign on the bar. I too in my signs like to see the next bar close down andhave a less than or equal high.

Joel Pozen will paint any bar with volume less than two that closes up or equal (if the bar prior is up fromthe bar two bars back) as No Demand and will paint it at the close of the bar. Hence one gets a lot of NoDemand bars that seem to be "out of place". Also one gets No Demand bars on bars that have greaterranges than the previous bar.

For me, a bar with a greater range than the previous bar needs to have a close in the High, middle, or lownot just anywhere on the bar. A close on the high, in the middle, or on the low would actually make the bar"No buying pressure" a form of No Demand but involving larger ranged bars.

A better definition to use as you trade would thus at least include size of the range (narrow) and locationof the price within that range ( on the high, in the middle or on the low) with volume less than two bars.

To sum it up:

A bar with a range narrower than the previous bar that closes equal or up on volume less thanthe previous two bars; and is closing either on the high of its range, the middle of its range orthe low of its range.

[multipage=No Demand Doji's]Thread posted by PivotProfiler located here.

There is a particular type of No Demand that I did not mention before and would like to say a few thingson it now.

Check out the attached chart. Notice the No Demand near the middle of the chart. This is an exceptionaltype of No Demand bar because it is also a Doji. With a Doji I am not concerned with a narrow range. Nordoes the close have to be in the high, middle or low.

For candle traders, a Doji is a bar that represents indecision. This goes well with what VSA teaches us.Although it is more lack of interest then indecision-a subtle difference.

Bill Williams talks about certain extreme bars. These bars, as it turns out, are Dojis with closes in the highor low of the range. He states that 95% of the time a market changes direction 1 to 3 bars later after sucha bar. As VSAers, we put the missing piece together: volume.

Again, VSA does not technically look at the open. Yet, No Demand bars that are also Dojis are usuallyvery strong signs of weakness. This is one reason I like to look at the open. The other being W RBs.

The astute among you will note that this bar actually closes LOWER than the previous bar. However, it isa buying bar (positional relationship) and thus a No Demand bar.

[multipage=Bullish & Bearish Volume]Posted here by PivotProfiler.

First we should define "Bullish and Bearish" volume:


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1. Bullish volume is increasing volume on up-moves and decreasing volume on down-moves.

2. Bearish volume is increasing volume on down-moves and decreasing volume on up-moves.

Now we can incorporate the concept ofThe path of least resistance:

* It takes an increase of buying (demand), on up-days or bars, to force the market up.

* It takes an increase of selling (supply), on down-days or bars , to force the market down.

The appearance of No Demand (low volume) on an up-move, shows little or no buying. Which means, ifthere is no trading going on in one direction, the path of least resistance is generally in the oppositedirection.

The appearance of No Supply (low volume) on a down-move shows little or no selling pressure. Whichmeans, if there is no trading going on in one direction, the path of least resistance is generally in theopposite direction.

Posted by Blowfish here.

Price advancing on declining volume = weakness (no 'pro' support for the move)Price declining rapidly (wide bar) on climatic volume but closing up.

VSA is based on Wycoff's ideas regarding acumulation/distribution and volume however it does go a fairway further.

[multipage=No Demand Bars]Posted by PivotProfilerhere.

The story continues........

Here is more on the underlying story. I have noticed that very often after a No Demand/No Supply (or low

volume in general), 1-3 bars later we see an Effort bar.

Let's examine the story.

No Demand means there is little to no activity by the Professional Money. For practical purposes, we willdefine Professional Money as those traders who trade with enough size to actual effect market change bycreating imbalances in supply and demand.

Now if the Professional Money is not buying as prices rise, then the must expect that prices are poised tofall.

If they expect price to fall, one should not be surprised to see a bar in the down direction where volume

picks ups as they try (effort) to take price in their desired ( or expected) direction. This is shows up as anEffort to Fall bar.

Individually, neither bar is defined by the other. That is to say, they are independently defined. Hencetheir propensity to occur around each other gives more insight into the validity of the story they purport totell.

Note that the chart also tells the opposite and as telling situation: a No Demand in the range of an Effortto Rise bar. As there was an effort to take price higher, price moved down. It begins to move back up.However, there is no longer any interest in higher prices. Since we are in the range or area where Bullsrushed in, we would expect more bulls to rush in. Or at least the same bulls to exert more force (effort). ByNOT seeing this, we can see underlying weakness in the market.

Story is the "why". Story coupled with repetition allows us to see things as being more than merecoincidence. Story gets us thru the down draws. All those traders looking for the "Grail" , might first startout by finding a story they can believe in. It wont take away the losses, but it makes them more palatable.


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[multipage=VSA Formulas]Posted by PivotProfilerhere.

No Demand 301

Base Definition:

Narrow range bar closing up with volume less than the previous two (2) bars. p. 32, Master the Markets.

TG (signal):

Narrow range bar closing up with volume less than the previous two(2) bars. The close should be in themiddle or low of the bar. p 153, Master the Markets.

Joel Pozen (Signal) No Demand & No Supply:

Code:

No Demand: C>ref(C,-1) and V


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NoDemand:=If(H>ref(H,-1) and L>=ref(L,-1) and (H-L)


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Take this for what it is worth. Remeber, we are not talking about buy/sell indicators. Understanding theSupply/Demand dynamics is essential.

Posted by Pivot Profilerhere.

Effort Bars

I define Effort bars as follows:

Code:

EffortU1:=If(H>ref(H,-1) and L>=ref(L,-1) and (H-L)=ref((H-L),-1) and O


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Price does indeed begin to fall from this point as Supply entered the market.

#1a. After the initial down fall we see an Effort to Rise. Please note that effort bars do not needconfirmation. Thus at 2:55 at the close of the bar we know we have just seen an effort to rise bar. Noreason to get long. Nothing on the 15 would merit it. The next bar(s) do not make a higher high. We arethus starting to see No Result on the very Next bar as it does not make a higher high.

#2 1/2 we jump back over to the 15 min char. We get an up bar with a narrow range an volume less thanthe previous two bars.THIS IS THE BASE DEFINITION OF NO DEMAND. This bar closes at 3:00. Now, for

confirmation, we will need to wait until the close of the 3:15 bar.

My software will place the sign on the bar at the close of its period and keep it there as long as the criteriaremain met. Thus at the close at 3:00 a red dot actually appears. It would disappear if the next bar makesa higher high and not return. It would also disappear if the current price is equal to or greater than theclose of the previous bar. But if the current price changes, the dot would come back.

But let's assume the dot does not show up in the first place. We know we have just seen the basedefinition of No Demand.

At 3:05, we see a bar that closes equal to the Effort to Rise bar. This is NO RESULT FROM AN EFFORTTO RISE/NEGATIVE ACTION. We would actually like to see this price lower than the low, but the bar priordoes trade lower than the effort bar. Simply, we are not seeing support at the low of the effort bar.

In sum:

We have a base definition of No Demand on the 15. We have seen supply enter on a wide spread barwith ultra high volume and we now have no result from an effort to rise: GET SHORT on 5 min.

#5 This bar confirms the No Demand bar. At its close the x appears and the dot is there for good. So, ifwe assume only appears at the end of the next bar, then it would appear now at the same time the xappears. BUT WE ARE ALREADY SHORT BECAUSE WE KNOW THE BAR TO BE NO DEMAND.

Yes the "sign" may come "after the fact" as the detractors say, but since we know how to read the chart,we are already in the trade.

EDIT: almost forgot to mention that the effort to rise bar was within the body of the WRB (hmmm, have Imentioned that before?).

[multipage=On Gaps]Posted by PivotProfilerhere.

The old adage is that "Gaps are filled". Here is an example of a Gap play on the open of the day.

The market opens up with a gap to the downside. The first bar we see is a dark W RB. (Note: while it isbeyond the scope of this post, this dark WRB actually forms another larger "gap" and is thus even more

reason to be thinking that price should move higher in order to fill the gap.) Things start to get interestingwhen we see the first labeled No Supply bar. The appearance of this bar itself is somet

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