8.63 Strategy 63: VSA No Demand / No Supply
Volume Spread Analysis (VSA) is the study of the relationship between Volume (the amount of money traded) and the Spread (the size of the candlestick). Institutions cannot hide their volume. When the market moves without institutional backing, it creates a fake move called No Demand (in an uptrend) or No Supply (in a downtrend).
The Core Concept of 'No Demand'
Imagine a heavy boulder rolling down a hill (a downtrend). Occasionally, it bounces up (a pullback). If that upward bounce has very little force behind it, gravity will quickly resume its pull, and the boulder will crash lower. In forex, 'No Demand' is an upward candlestick with a narrow spread (small body) and volume that is lower than the previous two candles. This proves that institutions have zero interest in buying higher prices.
Execution Protocol
1. Establish the Trend: Ensure the overall market is in a clear downtrend (for No Demand) or uptrend (for No Supply).
2. Look for the Pullback: Wait for price to pull back against the trend.
3. Identify the VSA Signal: Look for an up-candle (in a downtrend) that has a narrower body than the previous candle, and its volume bar at the bottom of the chart is explicitly lower than the previous two volume bars.
4. Entry: Sell the moment the next candle breaks the low of the No Demand candle.
5. Stop Loss: Place the stop loss slightly above the high of the No Demand candle.
2. Look for the Pullback: Wait for price to pull back against the trend.
3. Identify the VSA Signal: Look for an up-candle (in a downtrend) that has a narrower body than the previous candle, and its volume bar at the bottom of the chart is explicitly lower than the previous two volume bars.
4. Entry: Sell the moment the next candle breaks the low of the No Demand candle.
5. Stop Loss: Place the stop loss slightly above the high of the No Demand candle.
Self-Evaluation Check
1. What specifically defines a 'No Demand' candle in VSA?
2. If you spot a No Demand candle, what is the underlying market psychology?
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