TechViews

fantastic opportunity again coming
regards

Hello sir,
Eagely waiting to know more on vsa from the GURU...

Here is my take on reliance chart you are referring. See the image taken from Tradeguider. By the way there is no signal from Tradeguider. See the image




It all boils down to context. If you ignore it, you are at peril. Often we forget context while doing bar by bar analysis. See the bar numbered 1 in the chart. It is the highest bar in the chart from where downtrend began. Barring a few days in the middle i.e. when there was an intermediate short covering rally, on almost all bars price fell down in low volume or volume below average. Volume increased in the intermediate rally somewhere from 2150 to 2350. It again went down with below average volume. Clearly professionals are not buying.

Then comes two large volume down bars just before the red verticle line (cursor line) bar in the picture. The second bar (just before the red verticle cursor line) closes in the middle having comparitevly narrow spread and high volume. This bar in combination with immediately preceding bar indicates that someone is supporting the price preventing it from falling further. By this time we can draw a trendline (supply line) connecting two lower pivot highs which I have drawn in the image.

Now if the market is supported, that is not enough reason to rally. To rally all supplies must be removed. How do we know that whether there is supply or not? By testing. This test must be on low volume. Now note the bars in between red cursor line and bar numbered two. All of them have very high volume indicating that there is ample supply. By the way supply line also hold pretty well. That is why we have another test again after a few bars. That is the lowest low bar in the image. But even here also volume is high indicating supply.Another confirmation is the narrow spread bars after lowest low bar. Now look at the context.

From the begining we have a down trend which is still intact. We have three tests just below 2000/- all with high volume indicating supply. Is this the reason to go long? I have some reservations for going long right now.

It is impossible to code "context" in to software language. Only human brain can analyse all these things together. May be that is the reason why even Tradeguider could not be very successful.

See the slightly longer term chart of reliance below.



Are you of the opinion that

1. Prices are being supported at the support level so as to mark it up at the later stage? OR

2. Prices going down because of resistance from last down sloping trendline (drawn in the chart) and horizontal support line?

How do you evaluate volume in this entire chart and especially in the rounded area at the right end of the chart?

When you try to answer these questions, you will realize whether you are having bullish view or bearish view. Now you will realize the difference between a computer and a human brain.

Prakash Reddy,

RIL Cash

[/IMG]

http://img177.imageshack.us/img177/1510/rilcashjs9.png


1) As you will find the Skew (Kurtosis was above zero) ,the volume distribution was in favour.
2) VWAP Support was at 2054.95 & also the Peak Volume Price is 2050.40.

3) The 2nd Test (as you have mentioned though on Higher Vol) on 8th ,the close was way above mid-point,then on declines the volume was less than that day.
4) In my chart the Stop would have been below 1993.60 but considering 'Opening Price's-Impact-Displacement' of RIL ,reduced Rs 4.60.

These where my observations for going Long in RIL,now if it can close above 2055.00 to-morrow then the balance 50 % i am holding can be kept for Swing.

Asish

Ashish,
Thanks for the reply. So it is clear that you are having bullish view on reliance though strictly not on the basis of VSA but on the basis of some other indicators in combination with to a very minor extent of some VSA principles. I hope that you have tested the self made indicator. Since this thread belongs to VSA catagory, I was trying to avoid indicators altogether and concentrate purely from VSA perspective. Let us see how it progresses. As long as we do not hold any position (which is my case) it really fun to watch and learn.

prakashreddy,

This is not an indicator in that sense rather a Statistical tool ,the volume distribution,is taken not to be a 'Normal Distribution' (as in Bell Curve) rather a 'Fat Tail' type.
Here Peak Vol price & vol avg price & its Standard Deviation,etc. is used.

It is Volume Analysis in Statistical format.

Asish

Asish

Asish
Thanks for the explanation. Anyway, VSA does not advocate any such complicated statistical model or tool.

At a very Later stage of my Trading career,i started realizing that Himalaya,can be scaled not ; ONLY from India. Though we all have our prejudices & beliefs.Yes you are right VSA does not have that scope,but Volume Analysis definetly has,even 'Profile' approaches volume in another way & that is also a very good way.

IMHO though VSA does not advocate using of other tools adding other tools would definitely be a value addition. VSA is a concept only. hardcore VSA followers would abhor the idea of having complimentary tools. But why not have best of both worlds. For that matter the hawkeyetraders use trend following and momentum along with their proprietary VSA algorithm.