Good to see you agreeing, you've been killing it lately
Hi mate,
Although VSA can be very complex, in a nutshell yes is volume is extreme and spread is average could be selling...but you must consider the placement of this signal, is it at the bottom of the trend? Or at the top? Is it a down spread of upspread? Is it extreme volume because there is supply in the left of chart that needs absorbing? Was there background weakness/strength? So the bigger picture should be looked at too - is this signal in the right place?
In CZN here is a chart without all the B.O support and resistance. Just plain VSA
That red box is big boy offloading as you speak, very high volume and 0 spread.
The blue box is the recent buying, we know this was pro-buying because the lows were respected. To the left of the blue box was supply (red box) which was absorbed that day.
Similar to this we had todays spread which needed to absorb supply its left (purple box).
Todays volume and spread compared to the blue is fine, we had slightly smaller spread on slightly smaller volume. So safe to assume this was buying/absorbing just like the blue box.
What would offloading look like? Well if we had todays spread with larger volume than the blue, it would ring bells. Either there is offloading or simply too much supply to absorb.
I would be asking - why did we get larger volume than the blue but not a larger spread? Fortunately this is not the case.
However I also contain a probalistic mindset. You can never be 100% certain where price moves and anyone who does think so are lying to themselves. Pro's can flip the dump switch the next day, as seen by AHZ recently. Had huge buying until the last 3mins of the day and flipped the dump switch immediately.
