Thursday 30 May 2013
X Marks the Spot
Nice simple one today. I went for 10 points, as I doubled my investment this time, and chose the no demand in the 5 minute chart, labelled X, below. It was perfect because I made my money in 4 seconds, so no stress or waiting. This is why it's important to me that I pick the right time to enter the market. If you look at the bar at Point A you will see it has a very wide spread, and the volume is very high (meaning supply). Also, it is approaching and fails to penetrate the resistance level above. The bar following it is a narrow spread bar with reasonable volume (not low), and that also fails to penetrate the resistance line above. The narrow spread and average volume means that the professional money are capping the market - selling into the buying. There is clearly reluctance to go above that level. The next three bars are down, confirming this, then at Point X we see what we are waiting for - no demand - up-bar, volume less than the previous two bars. There is little demand for higher prices, hence the next bar is down, which is where I took my profit.
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Hello Rita,
ReplyDeleteThis is such a great chart to show VSA principles! First of all you see the two bar reversal, followed by the weakness shown in bar A. As for the extra clue,the resistance you mentioned did get briefly challenged - look at the red bar - but look at the result. Then no demand bar at X as you mentioned. Great, great setup - thank you very much for showing this chart.