Ok, so here is my first attempt at publicly posting a VSA/Wyckoff chart. Jako please be brutally honest with me. I did struggle a little with the tests either demand or supply but am sure this will shortly rectify itself....
CXO analysis 10.3.2016
A. Breakout on massive volume. Price closed in the lower half of the bar however, which suggests that amongst all of that buying there was a fair bit of supply as well. If there was no hidden selling, the close would have been at or near the top of that bar. That breakout bar needs to be checked against the next couple of bars to see the amount of supply that was absorbed and the extent of potential weakness moving forwards. A horizontal line could be drawn from the days high to the right of the chart. Later I would expect it to act as either some kind of potential support or demand.
B. In isolation each bar could be analysed to some degree, however Wyckoff and VSA combine a number of bars, to assist the chartist in gaining greater clarity around the ongoing relationships between price and volume. Bar B was traded on lower volume than the previous bar, but it was still well above average. Price opened higher than yesterdays open, however it opened only slightly above the previous days close. Again supply flooded the market therefore the weakness that showed up in yesterdays close, was confirmed by this bar.
C. The range of this bar was smaller than the previous 2 bars. Volume was significantly lower. Perhaps this was a bit of a test to check supply by the CO, and whilst price at one point broke through support, at some stage it was able to recover to close within the support zone.
D. Massive volume day again with price up 12.5%. However the close was midbar, representing a battle between the bulls and bears over the course of the trading day. Price closed above the support zone. Looking for follow up strength, otherwise the midbar close was indicating some weakness entering the chart. At this point a horizontal line could be drawn from the midpoint. Interestingly it would form both a support and resistance level for future prices.
E. Price opened and closed at the same level, again a battle between buyers and sellers. Price could not push higher however was able to push back to rest in the support area.
F. Low spread and low volume day representing a lack of interest by the CO. Sometimes however a low volume low spread day can be a trick used by the CO to attempt to put off retail buyers by taking their money off the table so to speak. Probably was suggesting a lack of demand given the lack of buyer aggressiveness in the previous couple of bars. The next couple of bars would also assist us to see if we are on the right track.
G. Price breaks down as sellers now completely overwhelm buyers. With prices being driven down to new lows was this a shakeout or similar? We shall see over the next few bars…We can also draw a new horizontal line to the right of the chart with this new low, as perhaps in the near future we can see how price and volume react near it.
H. Price has dropped on these two red bars, on falling and lower than average volumes. Perhaps this is the CO again testing to see if there is any remaining supply floating around.
I. With prices finding support over the last couple of bars, we are now faced with a price rise on small volume, respecting support and closing higher. Not sure how this relates to the previous bars except to say perhaps due to the lack of recent demand to drive prices higher it was a brief opportunity for a retailer to buy a few shares.
J. No volume recorded perhaps suggests a Trading Halt.
K. The open saw price gap up. This bar contains both accumulation and distribution. At one point price was able to push through resistance, however supply came in to force it back down. Volume was also absorbed by buyers, and price closed equal to its open. Price was also able to close back in the new support zone.
L. Price opened at the same level as the previous bar, however selling pressure forced price lower to close around support.
M. Low Volume on a day where price closed near the bottom of the bar, suggests that there was no demand from the CO. Perhaps at this point the CO was not quite sure if all of the overhead supply had been absorbed or was negative on the market. Either way at that point there was no interest to take it higher
N. I have used the next 2 bars for N. Initially price was driven higher, but there was also some selling as price bounced back off support to close near the top of the bar. Volume was not excessive. Perhaps this was a type of test as the next bar confirmed weakness with price closing down significantly.
O. Price gapped up on significant volume (potential weakness coming in) to close up 16%
P. Bars P and Q confirmed the potential weakness of bar O both closing lower, volume on that first bar was large and the second was not as low.
R. Price mananged to find support, spread was narrow and volume fairly average. Probably was some kind of test, but certainly supply seemed to have been small and demand was enough to halt further declines.
S. Potential Upthrust Bar - with price gapping up at open through the resistance zone. Volume was excessive and significant supply entered forcing the price back down. The sheer amount of overwhelming supply resulted in price closing lower than its open, despite it trading at higher levels during the day.
T. A narrow range bar on slightly above average volume where the open and close price were the same. Neither Buyers and Sellers could gain an upper hand. The next bar gave some indication of potential future direction however, as there was some accumulation on this bar. At some stage however it was met by supply when it hit the overhead supply zone (resistance) and then retracted. Volume was above average.
U. Price was able to push through that potential resistance zone on massive volume. This was suggesting that potential weakness was re-entering. Still it was a solid trading day with price up 22%. Many retailers would have been caught here, thinking that price would continue to rise, however as the CO could see the buy sell orders, he/she knew the probable price direction so was selling into the buying frenzy. It was here where the stock was transferred from the Strong Holders to the Weaker. The new closing price enabled us to create a new horizontal line that again would assist us to interpret future price and volume behaviour as it neared it.
V. Volume was reduced on this bar and price did not rise. Price actually pulled back a little, confirming that yesterdays bar contained a lot of retail buying and a lot of CO distribution. Interestingly the horizontal blue line that was previous resistance, has now potentially become a support level, as the bar did close on that line (which I have now changed to yellow)
V. Again price attempted to rise, but supply entered and the bar closed just above support. Volume on that bar was lower than the previous day
W. Buyers and Sellers went head to head, with price opening and closing at the same levels, on slightly above average volume. A neutral kind of bar perhaps with neither side dominating
Y. Looks like a trap was set, with the opening price slightly higher than the previous days close. I would think that a fair portion of the trading action happened in the first hour as retailers were flooded with supply. A wide ranging high Volume Bar would have triggered many stops, with the CO in the background eagerly snapping the panicked sellers. Price however did respect the new support zone as it closed on that level and above the days low. Given this there must have been some accumulation as well, pushing price off its lows to close around support. Lastly was this where the CO was re-entering as stock was being transferred back to them? Or will price be forced all the way down to the dark blue horizontal level and test supply. If this test is successful it would be a good place to take an entry on lower risk.
PS That area between the 2 white vertical lines seemed to represent congestion???
