Ok, so here is my first ever proper attempt at a VSA/Wyckoff Analysis and I am left with this feeling.........ah ok so I only know this much..........was a very interesting exercise and I know that once I have undertaken a few hundred more then I might be moving into the I know a fair bit more territory, then after 1000 plus will be, I can just glance at the chart without any indicators at all and see whom is winning the good fight. Am about to read your analysis as soon as this is posted to see if I gave myself a pass, credit, or high five...
Anyway Jako, my apologies with my snipping tool. Whilst I am able to snip a pic and save it, as you will see I can only write over using the pen, so my chart ended up looking like a kindergarten effort. Out of interest is there a way that I can say, grab a chart for example, snip it, save it, then somehow professionally make additional comments with a recognised font etc like what you did with this chart?
PS Those three light blue circles could represent higher lows/bottoms which are a SOS.
Jako, around bar 1 and the previous two bars, out of interest was there a gap open on bar 1? I always find it telling when the Market Maker is expecting higher prices (as he/she can see both sides of the buy n sell orders, conditional triggers etc) so often they will gap open the stock to lock in those holders whom were not trading in the sidewards range, but were locked in, and the CO did not want them to flood supply as they would be some frustrated sellers in there….???
Loving Bar 1 anyway. From a cursory look, it would appear volume on the breakout was about 2 times the recent average so was certainly not excessive and to see it close on the high or just shy was very bullish. I am always interested in trying to work out where and when different market participants enter a stock. Eg Those that bought in for FA reasons ie investors, traders buying/selling demand and supply zones, breakaway and gap day traders, short term traders, swing traders………The reason that I like to attempt to work the above out is that so I can gain the greatest leverage over them, in other words, if I know that the day traders are loading up then I will be expecting some kind of selling into a wide bar as evidence of their participation. So to take advantage of this example, you can follow their footsteps and trade alongside of them literally, and in another account do the shorter term hold and sell the spike in the coming days if you happen to catch it at the right time. I often do not sell near the high and leave profits on the table to use that cliché, but once I hit my targets I have to follow and execute my plan, otherwise I would leave myself open to emotions.
Somewhat surprised that bar 2 did not have a longer tail where the CO could test for supply at that point….by running it down they could of at that stage flushed out some sellers by triggering stops of those whom had locked them in. I also would have expected that traders would have bought near the close and sell the open to scalp at few pips perhaps, so also suspect their activity was in bars from 1 to 4.
So bar 3 has the highest volume recorded so far in this chart, and yep that close mid way was certainly a red flag. If I had of been in this trade, and it had already hit my target I would have bailed. This is where intraday trading strategies for later on will be helpful, as squeezing out as much profit as possible is the name of the game. For those that held on to the ride, a massive volume day yet again, however as was present in the previous day, supply was flooding in. I actually think that given the volume footprints, a mid bar close was interesting. I note in your explanation that a mid bar close at that particular point “…price will pullback in an attempt to encourage supply coming in to sell out”..
Re your thoughts mentioned above, are you suggesting that the mid bar close was deliberately manoeuvred in such a manner so that all supply around those levels would be drawn out?? I find it interesting from a trading perspective, as I would not want to be left holding all of that stock with no more buyers at those levels to sell into. Cant quite get my head around that one???
…and the next chart is a shorter timeframe, which allows a look inside of each of those four bars. I'll leave this available for anyone who might like to comment before having a go myself later....
So zone A was all the attempts to run and jump through supply. I noticed that it took a number of efforts before the creek could be penetrated at the path of least resistance…..Question here……why was it on that bar that it was considered to be the one jump over?, or was this just purely a function of plain demand v supply with no intervention so to speak? Point B in yellow was the breakthough with conviction, reward for effort was solid, price closing on those two bars at or just under the high, bullish result on those two bars, where all supply was absorbed, perhaps that was the path of least resistance due to the high volume??
Then over the next two bars, testing supply, the bar at your number 1 is on low volume, so I would think it was a successful test, and that the CO can begin to mark up the sp higher.I also think that that second red bar was supply coming in which was absorption volume. In terms of creating some kind of support/resistance zones, we could take the high and close of the first bar and extend the lines out to the right of the chart horizontally.
Zone 2 is an interesting one. We have 5 periods of activity to look at. The first bar contains some higher volume coming in, with a narrow spread bar closing in the middle. The rest of the bars were reducing low volume with price closing in the middle. The reducing volumes are suggesting a lack of interest from buyers to push the sp higher at that point. Those horizontal lines that were created in Box 1, provided a resistance level in Box 2, and then in Box 3 they acted as support.
Zone 3 wide bars tapping right into the psychology of the market participants where many retailers would perhaps not want to buy, as they could have bought it cheaper the day before, so don’t bother to proceed, and more of the float is soaked up by the CO, munch munch. This phase is a definite mark up phase as demand from the Pros coming in hard. The first 2 bars are quite Bullish closing on the high 2 days in a row, so buyers had the upper hand. The 3rd and 4th bar in comparison paint a change in behaviour by market participants. Bar 3 clearly shows that buyers were completely swamped by supply coming in, hence the close on the low/or close to the low. Bar 3 also allows us to draw a potential support line across to the right of the chart. On the last bar in that box, the price bar manages to find support albeit on increased volume. Now whilst in isolation that price bar may show weakness as it closed near or on the low, the bar did not fall through that support zone that was previous resistance to bar 1. So combining those bars togther in that box, we are now ready to move onto the next price/volume action zone so to speak.
That 1st bar of box 4, was on above average volume and had a solid reward as it closed at or near the high for that period. Demonstrated that the momentum was still strong when looking at it, not in isolation, but how it continued the upward trend of the chart. The second bar contained significant selling, represented by both the level of volume traded (slightly higher than the previous bullish bar) and price closed in the lower 2nd of the 3rd of the bar suggesting that potential weakness had appeared, and the shift of price behaviour was now happening.That last bar of Box 4 on high volume was probably confirmation that sellers were overwhelming buyers or supply swamping demand. Should price fall through that support zone in grey with volume, perhaps that is where the stop loss would be placed, to lock in all that profit?
