Volume Spread Analysis
Understand Market Psychology
Basic
Price Spread same as Volume --> Volume Validate Price --> Continuation
Price Spread opposite as Volume --> Volume Diverge Price --> Inverse Signal
Spread
The difference between opening and closing of the price (body of candle)
Volume
The frequency of transaction of the price change during a speicifc period of time
Above Average High Volume
Highest Volume in current session which is higher than average volume (20-period Moving Average)
Wyckoff Theory
Accumulation
Supply and demand are in balance to each other after a MARK DOWN move
Mark Up
Demand is higher than supply causing upward bullish rally
Distribution
Supply and demand are in balance to each other after a MARK UP move
Mark Down
Demand is lower causing downward bearish rally
Sign of Strength (SOS)
Seller exhausted (demand low) after downtrend and Buyer increase (Demand increase) --> Market rise
1. Down Thrust
Bullish pin bar or Doji bar with Low spread with ultra-high volume --> More demand than supply
2. Selling Climax
High spread bearish candle with downward rejection wick (Large Body with Long Wick candles) with high volume --> Wick is about 25%~50% of body --> More demand than supply
3. Bearish Effort < Bearish Result
Spread is larger than previous but volume is lower than previous --> Increase demand and reduce supply --> Market rise
4. Bearish Effort > Bearish Result
Bearish Candle with Spread is lower than previous but volume is higher than previous --> Demand be more than supply --> Price rise
5. No Supply Bar
Low spread candle having downward wick whose volume is lower than previous two volume --> Lack of supply and demand is overpowering --> Price rise (Continuation Signal, not Reversal Signal)
6. Pseudo Down Thrust
Bullish pin bar (Long lower wick than upper wick) or doji bar (Open and Close almost equal candle) having low spread with volume lower than previous two --> No supply or lack of supply (Continuation Signal)
7. Pseudo Inverse Down Thrust
Inverse bullish pin bar or doji bar having low spread with volume lower than previous two --> No supply or lack of supply (Continuation Signal)
8. Inverse Down Thrust
Inverse bullish pin bar or doji bar having low spread with ultra-high or above-average high volume --> More demand than supply --> Price rise
9. Failed Effort Selling Climax
Higher spread than previous with higher volume than previous, next candle is bullish, absorbing the entire bearish effort
Sign of Weakness (SOW)
Buyer exhausted (demand low) after uptrend and Seller increase (Supply increase) --> Market fall
1. Up Thrust
Bearish pin bar or doji bar with low spread with ultra-high volume --> More supply than demand
2. Buying Climax
High Spread Bullish Candle with upward rejection wick with ultra-high volume
3. Bullish Effort < Bullish Result
Spread is larger than previous but volume is lower than previous
4. Bullish Effort > Bullish Result
Bullish candle with Spread lower and volume higher
5. No Demand Bar
Low Spread bullish candle with upward wick (Lower wick is longer than upper wick --> Price go up) with lower volume than previous two (Continuation Signal)
6. Pseudo Up Thrust
Bearish Pin Bar or doji bar with low spreads with volume lower than previous two (Continuation)
7. Inverse Pseudo Up Thrust
Inverse Bearish Pin Bar or doji bar with low spreads with lower volume than previous two (Continuation, Effective after Bearish Momentum)
8. Inverse Up Thrust
Inverse Bearish Pin Bar or doji bar with low spreads with high volume --> More supply than demand
9. Failed Effort Buying Climax
Higher spread than previous with volume also higher than previous, and next candle is bearish, absorbing the entire bullish effort
Thrust
Bullish P; Low S; High V
Bearish P; Low S; High V
Climax
Bearish C; High S; High V
Bullish C; High S; High V
Effort < Result
Bearish C; Larger S; Lower V
Bullish C; Larger S; Lower V
Effort > Result
Bearish C; Lower S; Higher V
Bullish C; Lower S; Higher V
No Bar
Downward W; Low S; Lower V
Bullish C; Upward W; Low S; Lower V
Pseudo Thrust
Bullish P; Low S; Lower V
Bearish P; Low S; Lower V
Inverse Pseudo Thrust
Inv Bullish P; Low S; Lower V
Inv Bearish P; Low S; Lower V
Inverst Thrust
Inv Bullish P; Low S; High V
Inv Bearish P; Low S; High V
Falied Effort
Higher S; Higher V; Next C Bullish
Higher S; Higher V; Next C Bearish
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