Indoagri - Weakness In VSA Analysis
Did a bad trade today and I am angry at myself because I have seen that pattern before. But emotions get the better over me. When I enter the trade, I feel like exiting immediately. Long story cut short, let me share with you this "Weakness Setup that you might occasionally see in charts"
Do remember this pattern that I am going to show so that you do not make the same mistake as me.
Read the texts in the chart
So what was the grave mistake that I made???
From the bubble text, i wrote about the "Sign of weakness" in the background.
Yes, I entered the following day despite weakness in the background...
The trade is awful, not because money was lost but because I entered on impulse.
Look at the volume and the long upper tail on 7August...I should have waited for any forms of "Shake out" or test to happen.
Below is a definition of "Testing"
:: Testing supply
Supply coming into the market is dangerous to any pro that is bullish, because they have to absorb any
selling if they want the high prices to be maintained. The danger to the pro is that he may be forced to
buy at very high levels and will lose money if the market falls.
Rallies are usually short-lived after you see supply in the background. Pros know that given enough time
(with bad news, down-moves, etc.) the floating supply can be removed from the market, but he has to
be sure before trying to accumulate. The best way to do this is to rapidly mark prices down, which will
challenge any bears to come out into the open and expose themselves. The amount of volume will tell
the pro how much selling there is…
Low volume means that there is little selling on the mark-down. High volume shows that there is selling
(supply) on the mark-down. This process is known as testing. This process catches stop and shakes out
the market as well, making the way for higher prices. It is a good sign of strength (as long as there’s
strength in the background). A successful test on low volume means that the market is ready to rise
immediately, while a higher volume test results in a temporary up-move and will be subject to a re-test
of the same price area again at a later time.
Any down-move dipping into an area of previous selling which then closes on or near the high of the bar,
on volume is a strong signal for strength (because the bears pushed the prices back up).
If the market is bearish, you may see a test. But of the market does not respond to what is normally
seen as strength, then it shows further weakness. Any testing that does not respond immediately with
higher prices within the next day or so, is a sign of weakness. This is because pros never go against the
market. If they think the market is still weak, they will withdraw from trading. If it were a true sign of
strength, the market-makers would have stepped in to start buying. (Source :MTM notes,credits)
To end off, do take note of that particular upthrust candle stick, especially coupled with high volume..As much as possible, take note of all the strength and weakness background that you might have when placing your trade! DONT CONTRADICT YOURSELF!
Do remember this pattern that I am going to show so that you do not make the same mistake as me.
Read the texts in the chart
So what was the grave mistake that I made???
From the bubble text, i wrote about the "Sign of weakness" in the background.
Yes, I entered the following day despite weakness in the background...
The trade is awful, not because money was lost but because I entered on impulse.
Look at the volume and the long upper tail on 7August...I should have waited for any forms of "Shake out" or test to happen.
Below is a definition of "Testing"
:: Testing supply
Supply coming into the market is dangerous to any pro that is bullish, because they have to absorb any
selling if they want the high prices to be maintained. The danger to the pro is that he may be forced to
buy at very high levels and will lose money if the market falls.
Rallies are usually short-lived after you see supply in the background. Pros know that given enough time
(with bad news, down-moves, etc.) the floating supply can be removed from the market, but he has to
be sure before trying to accumulate. The best way to do this is to rapidly mark prices down, which will
challenge any bears to come out into the open and expose themselves. The amount of volume will tell
the pro how much selling there is…
Low volume means that there is little selling on the mark-down. High volume shows that there is selling
(supply) on the mark-down. This process is known as testing. This process catches stop and shakes out
the market as well, making the way for higher prices. It is a good sign of strength (as long as there’s
strength in the background). A successful test on low volume means that the market is ready to rise
immediately, while a higher volume test results in a temporary up-move and will be subject to a re-test
of the same price area again at a later time.
Any down-move dipping into an area of previous selling which then closes on or near the high of the bar,
on volume is a strong signal for strength (because the bears pushed the prices back up).
If the market is bearish, you may see a test. But of the market does not respond to what is normally
seen as strength, then it shows further weakness. Any testing that does not respond immediately with
higher prices within the next day or so, is a sign of weakness. This is because pros never go against the
market. If they think the market is still weak, they will withdraw from trading. If it were a true sign of
strength, the market-makers would have stepped in to start buying. (Source :MTM notes,credits)
To end off, do take note of that particular upthrust candle stick, especially coupled with high volume..As much as possible, take note of all the strength and weakness background that you might have when placing your trade! DONT CONTRADICT YOURSELF!
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