Hot Copper Charting and Chat, page-236

@Rooster100 - How's the VSA indicator coding h going? I'm running a bit late with this, so apologies there, but find below my documentation for the "Test Ordinary" indicator. I included a "Failed Test" indicator when I first developed the Test code. From memory, I think that a failed test can be a significant event to watch out for.
@Jako8557 - Do you have any comments re failed tests?

Test Ordinary (xSOS02)

Purpose: A Test is testing for supply. Too much supply and the market will fall, but if there is no more supply the market will go up. It is a secondary confirming signal. Smart Money is testing to see how much supply is left to buy before they are ready to mark the prices up.

Identification: The Test bar must be a Down Bar closing lower than the previous bar or if it is an Up Bar at least 50% of the range of the bar must be below the low of the previous bar. The bar should also have more than 75% of its range below the close of the previous bar.

The bar should have a narrow to medium spread/range.

The volume of the bar must be low, i.e. lower than the previous two bars.

The bar should close in the middle to high of the bar, i.e. above the lower half of the bar.



Notes: Tests can appear in four different areas. These are:

• After Buying (Signs of Strength) following a downtrend;
• In an Uptrend;
• After Selling (Signs of Weakness) following an uptrend;
• In a Downtrend.

The Test bar is only of significance after a major sign of strength and/or when the market is in an uptrend, i.e. after Accumulation or in a rising market. Tests after Distribution or in a Down trend are likely to fail.

The bar following the Test will confirm the strength. A Failed Test, when the following bar closes down, is a sign of weakness especially in a downtrend where it is considered a strong sign of weakness.

A Test in a downtrend with the next bar a down bar with higher volume is a Failed Test, refer to the “xFailed_Test” Indicator.

A Test is a confirming signal for strength and trend. A following bar must close higher than the Test bar in order to confirm the strength.


Metastock Indicator Formula:

Test Ordinary Indicator

{xSOS02_Test_Ordinary (20111201)}
xSOS2:=If(
CLOSE>=(LOW+HIGH)/2
AND
(CLOSE0
AND
CLOSERef(VOLUME,-1)
AND
FmlVar("xMMAOsc_Indicator_v5","XSTIDS")<0
AND
FmlVar("xMMAOsc_Indicator_v5","XSTIZS")<0
,-0.75,0);
xSOS3;

{xSpread (20110602-001)}
xP:=10; {30;}
xAS:=Mov((HIGH-LOW),xP,S);
xS:=(HIGH-LOW);
xAS25:=xAS*1.25;
xNarrow:=If(xS<=0.8*xAS,1,0);
xWide:=If(xS>=1.5*xAS,-1,0);
xNarrow;
xWide;
{xS;
xAS;
xAS25;}

Hope this helps - Wilf.