the a’s of vsa · bar a = test bar b = potential stopping volume bar c = test after shakeout bar...

The ABC’s of VSA: Using Failed Signals to Confirm

By Lauren Snedeker

Today’s Objectives:

To confirm the signals you’re reading

To determine if they’re successful or not

To evaluate the whole picture with the information you now have

What is the Overall Picture?

Accumulation Phase

A Period of buying by the Smart Money

Wide Spread Down Bars

Ultra High Volume Bars

Stopping Volume, Selling Climax, or a Shakeout

Bar by Bar Identification

Bar A = Test Bar B = Potential Stopping

Volume

Bar C = Test after Shakeout

Bar D = Ultra High Volume

Bar E = High Volume

Bar B – Potential Stopping Volume

Wide Spread Down Bar

Bad News – rumors that the iPad was cutting production

UHV = Smart Money buying as Herd is selling, adds to the orders and thus the volume

Bar B – Potential Stopping Volume

Down move behind it X Next bar should be up to confirm

• Market will not rally until

supply has dried up

• Look for a test back into this area, on lower volume

Bar C – Test after a Shakeout

Down Bar Strength in the

Background = Bar B Retesting the Shakeout

on Oct 4, 2011 Bad News: no iphone 5 Next Bar should be up –

expect higher prices

Bar A = UpThrust

True Upthrusts have WEAKNESS in the Background With Strength in the Background, it is Likely to be tested or it is a FALSE UPTHRUST

Bar B – No Demand Fails

Study the background carefully! With Strength in the background, The indicator alone carries less Significance. Next bar should be up to confirm In an uptrend, it may lead to a Pause or a small decline back down to support at best.

Bar 1 – No Supply Bar 1 – confirms the failure of Bar A -- be cautious following an Upthrust If you see a down bar with a narrow Spread with volume lower than the two Previous bars. This shows lack of selling Pressure. Works best with Strength in Bkgrd & A minor SOW in an uptrend The No Supply bar fails because the next Bar is down

So it’s not ready to go up YET Watch for lower volume and confirmation

Bar C = UpThrust

False Upthrust Again Doesn’t break the high Of BAR B Bar C – confirms Bar 1 & confirms Strength

Bar D & E – No Demand

Next bar should be down X In an uptrend not a downtrend X Strength behind you BAR E – NO Demand Back into the Creek, low volume Next bar is up – Fails!!!!!! Trending diamonds change Volume decreases

E

Bar E – confirmation signal

During Accumulation, the Smart Money Is testing for supply in the market Before bringing the price up again Bar E = A Final Testing of Supply in the Market Its failure turns the sign of weakness into a sign of strength Next bar confirms the strength in the Market Either Green Arrow is a good entry point

E

EUR/USD 15M

Bar A & B = Supply Coming In Start of the Day – High Volume & Continues Begin Distribution/Selling Phase Look for volume to decrease as prices rise Look for a No Demand in a Downtrend and Volume to Wane Failed Tests = No Demand Failed Strength = Confirms Weakness

Did we meet our Objectives?

Did we meet our Objectives?

Can you elicit meaning from that failure? In other words – is the failed signal Confirming the opposite? Can you determine

if the indicator is A success or failure?

You should be able to:

determine if a signal has failed

ignore the overwhelming urge to see a red signal as sell and a green signal as buy

look at the overall story/picture/sense of the chart and check multiple timeframes to confirm

Learn more about VSA

• Go to my page: www.tradeguider.com/lauren

• Call me: 312-373-6294 (direct)

• Email me: lauren@tradeguider.com

• Skype me: lauren13sned

• http://www.volumespreadanalysis.com/library.asp