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The ABCs of VSA:

Using Failed Signals to Confirm

By Lauren Snedeker
Todays Objectives:
To confirm the signals youre reading
To determine if theyre 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 its not ready to go up YET


Watch for lower volume
and confirmation
Bar C = UpThrust

False Upthrust Again

Doesnt break the high


Of BAR B

Bar C confirms Bar 1


& confirms Strength
Bar D & E No Demand
Next bar should be down
E
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
Bar E confirmation signal
During Accumulation, the Smart Money
E 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
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
Can you determine Confirming the opposite?
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

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