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VSA Guide4 (1)

Periodic shake-outs are essential for market growth, often triggered by unexpected bad news, leading to panic selling among traders. A reversal after a shake-out, especially with low or high volume, can indicate a good entry point into the market. Recognizing market strength or weakness is crucial, as low volume up-bars and up-thrusts can signal a lack of demand and potential market weakness.

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13 views1 page

VSA Guide4 (1)

Periodic shake-outs are essential for market growth, often triggered by unexpected bad news, leading to panic selling among traders. A reversal after a shake-out, especially with low or high volume, can indicate a good entry point into the market. Recognizing market strength or weakness is crucial, as low volume up-bars and up-thrusts can signal a lack of demand and potential market weakness.

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dgshaktiportal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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3.

Shake-out
For markets to keep going up there has to be periodic shake-outs. They will arrive when least expected on
BAD NEWS.

Supplementary Comments:
After you have already seen substantial falls, sudden bad news will result in an additional sharp down move.
This creates panic selling from many traders who refused to sell earlier. However, if the lows have fallen
down into recent new lows and the price reverses to close on or near the highs either on low volume (little or
no supply) or high volume (market makers absorbing the supply) this is usually now a good point to enter the
market.

To keep going up the markets must have LOSERS. Somebody has to pay for the higher prices. This is how
the markets work. A selling climax, shakeouts, testing, bottom reversals are all signs of strength because
this kind of price action frightens many traders into selling their holdings at low prices, catch stops and
encourage many to go short in a strong market.

You may see a 'test' in a very weak market and to recognize these you will have weakness in the
background not strength. A main rule associated with a 'test' in a weak market or a bear market. The
market should respond to a test in a positive way. That is, immediately going up on average to high volume.

If the market is reluctant to go up after a 'test' then the market is still weak. Market makers will have seen the
apparent lack of supply on the 'test' if they where bullish they would buy the market fast after any green
signal in a falling market.

The market will tell you if it is really bullish or this is just a pause in a weak market.
Low volume up-bars.
Upthrusts
Very high volume up-bars with a narrow spread.

4. Shake-out
A Bottom Reversal or a shake-out over two bars.

Supplementary Comments:
It is designed to shake you out of the market, catch your stops, or to mislead
you as much as possible.

They mostly happen on the market lows. If the next bar is wide and up with
volume average to high (as interpreted by the program) you would expect
higher prices. If the next bar is reluctant to go up on low volume and perhaps
a narrow spread then this is NO DEMAND. You may have some strength but
the market is not ready to go up yet.

What are the following bars telling you?


Low volume up-bar: No Demand.
Up-thrusts: additional weakness.

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