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VSA Guide2

The document discusses the concept of climactic action in trading, highlighting the significance of volume in market movements. It emphasizes that high volume on down bars can indicate professional intervention, while low volume on up bars may signal weakness. Additionally, it points out the importance of observing market maker behavior to gauge supply and demand dynamics.

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53 views1 page

VSA Guide2

The document discusses the concept of climactic action in trading, highlighting the significance of volume in market movements. It emphasizes that high volume on down bars can indicate professional intervention, while low volume on up bars may signal weakness. Additionally, it points out the importance of observing market maker behavior to gauge supply and demand dynamics.

Uploaded by

dgshaktiportal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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3.

Climactic Action

A down bar on very high volume with the next bar up shows professional intervention. This is stopping
volume.

Supplementary Comments:
If the very high volume had been selling volume then the next bar would
hardly be up.

This is where the concept of 'buying and selling volume falls down. They
assume that if the bar is a down bar then the volume must have been selling.
This example blows that theory out of the water

Tip:
Stopping volume may originally enter the market in the early stages of
accumulation. There may be a lot of whipsawing to come as they accumulate
more stock.

Also keep in mind that markets do not like very high volume on up bars as supply may be swamping
demand.

4. Climactic Action
There appears to be some supply in the market. If there is an old top to the left, you are probably seeing
absorption volume from those traders that had been locked into a poor trade and are now selling. If the
market is a strong one then market makers will buy into this supply, giving the impression that the market
could be weak because of the high volume.

Things to Look Out For:


The following bars are important. Let the market makers tell you what is going
on.

Low volume up-bars show no demand, which is an unwillingness of the


market makers to participate in a rising market, because they know that it is
weak.

High volume up-bars, closing in the middle or lows, indicates that supply is
overcoming the demand and represents a further confirmation of weakness.

Any down-bars with low volume, closing near the highs will show that strength
is returning to the market.

Please see the TradeGuider Primer for more information.

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