EURUSD – VSA Market Analysis

2015-12-06 11_59_29-EURUSD,H4

In previous EURUSD analysis you can find detailed review of price moving in ascending triangle and the place where the price has broken the lower line of triangle. After the support was broken the price had no resistance and was falling during 1 month until it approached long term support which was created by previous low in March 2015. It was the place where we could expect resistance to lower prices. Analytical Trader detected very strong signal (Major Demand) near support and market turned up. There was very high activity during this day (the volume was very high, price range was more than 450 pips compare to average which is about 100 pips). Background has already changed from weak to strong.

Let’s get a closer look at this place in lower timeframe.

2015-12-06 13_19_14-EURUSD,H1

Even in this timeframe you see the same very strong signal (Major Demand) in place of price reversal. Here we have 2 wide spread up-bars on high volume. Volume always indicates the amount of activity going on, the corresponding price spread shows the price movement on that volume. Volume Spread Analysis seeks to establish the cause of price movements, and from the cause, predict the future direction of prices. The ‘cause’ is quite simply the imbalance between Supply and Demand in the market, which is created by the activity of professional operators. When reading the market, try to see things in context. If you base your analysis on an effort versus results basis, you will be taking a very sensible and logical approach that detaches you from outside influences, such as ‘news’ items, which are often unwittingly inaccurate with regards to the true reasons for a move. In our case 2 up-bars with high volume – this is effort to go up. Next bars show result of this effort – it is also bullish.

VSA and Reversal indicators will be very helpful for beginners in VSA, because even without deep theory knowledge you can easily find imbalance between Supply and Demand and a good setup for long/short trade. “Reversals” is our new indicator which with high accuracy shows the place where price changes its direction. If you are good at VSA theory, still you can use VSA and Reversal indicators, because they help you to understand the whole picture just at one glance on the chart and confirm your own view in the market.


Diego KRUGER said:

December 6, 2015 at 2:11 pm

Thx for covering this dramatic and significant move that took place last week.
I was demo-testing to see whether VSA would have shown the way, before it happened, so helpful post


Alex Lambert said:

December 7, 2015 at 2:14 am

Thank you for detailed analysis. Please keep up with producing more of this kind of analysis. We will continue to read and use them in our trading research.

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