Volume Spread Analysis (VSA) looks at three things on every candle: the volume, the spread (high to low range) and where the candle closed. The idea is simple: volume is the effort, the price move is the result. When effort and result do not match, something is happening behind the scenes.
Effort versus result
- High volume, small spread: a lot of trading but little movement. Someone is absorbing the orders.
- Low volume, wide spread: the move is happening without participation and may not last.
- Close position: a close near the high on a down bar shows buyers stepped in during the bar.
Common VSA signals
Stopping volume
After a fall, a down bar with very high volume that closes off its low. Selling was met by strong buying: the fall may be slowing.
No supply
A narrow down bar on volume lower than the previous two bars, often after a test. Sellers are not interested at these prices, which can support a move up.
No demand
The mirror: a narrow up bar on low volume. Buyers are not interested, which can come before a move down.
Climax
A very wide bar on extreme volume at the end of a long move. It often marks exhaustion rather than strength.
Context first
A VSA bar alone means little. Read it at support or resistance, in the direction of the higher time frame trend, and confirm it with the next bars. ICC Charts' VSA models also use a trend filter (the "VSA bias") so that setups against the trend are left out.
VSA in ICC Charts
The VSA tools colour the volume bars by their meaning and label the key bars on the chart, and the VSA models are scanned live like the ICT ones. Open the terminal and add the VSA volume pane to start.
Education only. Trading involves risk; practise on a demo account first.
Open ICC Charts in your browser, free, with the ICT and VSA layers and the model scanner.
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