The ABC's of VSA

The ABC’s of VSA: Absorption Volume & Breakouts By Lauren Snedeker

Today’s Objectives Define and understand Absorption Volume Confirming the Breakout Bar Entering the Breakout Trade Recognize a False Breakout

What is Absorption Volume? • Let’s work backwards and review what we know! • Take out a pen and paper and number it 1-5 • Is the sentence True or False? If False, correct the answer. Ready??????

Quizeroo 1. Volume = the Supply in the market 2. Up Bars on Ultra Low Volume is the Climactic Action 3. The Smart Money sells in rising prices 4. A No Demand bar confirms rising prices 5. Support & Resistance should be ignored

Quiz Answers 1. Volume = the Supply in the market True

2. Up Bars on Ultra Low Volume is the Climactic Action False – Ultra High Volume

3. The Smart Money sells in rising prices True

Quiz Answers Contd… 4. A No Demand bar confirms rising prices False – No Supply 5. Support & Resistance should be ignored False – observed How did you do?????

Absorption Volume Uptrend Wide Spread Up Bar Closes on the high Ultra High Volume Breaks through an old top to the left

The Exception Principle

What Absorption Volume means • The Wide Spread Bar = Effort by the SM to push to price up • The High Close = Interest or Demand for higher prices by the SM (vs an UpThrust) • The Ultra High Volume = Supply being absorbed or bought or accumulated by the SM • Must break through an old resistance area • A genuine breakout is tested within 2 bars

Example 1: SPX 5 Minute

Example 2: ES 5 Minute

B – Test of Supply within 2 bars C – No Supply/Test D – Test

Example 2 - 700 Bar History

Example 3: ES 15 Minute

Example 3: 700 Bar History

Example 3: Support & Resistance

Entry Points • A No Supply/Test in a Rising Market (uptrend) • Enter above the high of the No Supply • A Genuine Breakout is tested within 2 bars • A down bar on volume lower than the previous 2 bars (pink in TG) • Next bar closes up

False Breakout vs True Breakout

False Breakouts False Breakouts Fail on No Demand – they go up on low volume and come right down Upthrusts further confirm weakness 2 Bar Reversals or No Result after Effort – kill the momentum and stop the buying

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