VSA – volume and spread analysis; the indicator is based on the dependence of the difference between the price of an asset at the opening and closing of a candle (spread) on the trading volume. It implements the “effort – result” principle. Where the effort is the number of closed orders or volume, and the result is the size and shape of the bar.
Unlike other indicators and types of technical analysis, VSA allows analyzing how major market players behave and see their intentions. “Smart money” can manipulate the market in its own interests, and VSA makes it possible to predict further development of the situation.
There are many VSA patterns, such as Rising Market, Bad Holding, Test of breakout, Breakout, Absorption, and many others. Each of them is formed as a result of certain actions of the major players and gives an indication of their intentions.
For example, the Rising Market pattern or “the end of a growing market” shows us that despite the positive news and seemingly positive dynamics with high volumes, the spread is small. And this, in turn, leads to a rapid fall in the rate of the asset. At such moments, a lot of long positions opened in the wake of good news, are liquidated with Stops.
The Bad Holding pattern illustrates the opposite situation. Against the background of bad news, the asset price is falling, while the trading volume is large and the spread is narrow. Small players, seeing all this, put positions in shorts, but they are liquidated on the next bar.
And these are just two of the many patterns that exist in VSA analysis. To learn how to see them and understand them, you will have to spend a lot of time, effort, and also money. Mastering this method costs about $ 1000.
But the good news is that all the patterns you need have already been taken into account in The Waved Indicator! Moreover, the indicator also applies non-standard patterns that cannot be found in the books on technical analysis. They are derived from the analysis of hundreds of thousands of charts of financial instruments by a neural network. And their accuracy can be seen on any chart you choose.
VSA signals in the indicator are specific situations that can occur on all timeframes without exception. The larger the timeframe – the more powerful the signal, but also the higher the price will go. It is best to focus on them starting with a 3-hour timeframe. Although, you can see how they work even on a minute timeframe.
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