VSA (Volume Spread Analysis)
Reading the story behind volume and price
Volume Spread Analysis (VSA) reads the relationship between candle spread (range) and volume to detect institutional activity.
Key VSA signals: 1. Stopping Volume: High volume + narrow spread at bottom = buying absorption 2. No Demand: Narrow up bar + low volume = weak buying (avoid longs) 3. No Supply: Narrow down bar + low volume = weak selling (avoid shorts) 4. Climax Volume: Extreme volume + wide spread = potential exhaustion 5. Test: Low volume revisit of previous support = holding
The effort vs result principle: - High effort (volume) + small result (narrow spread) = absorption - High effort + big result = genuine move - Low effort + big move = unsustainable
VSA works on any instrument and timeframe but is most powerful on 4H+ charts.
Pro tip: VSA stopping volume on a daily chart at major support is one of the strongest accumulation signals.
Common mistake: Ignoring volume and only trading price patterns. Better: Volume tells you who is behind the move. Price patterns without volume confirmation are weaker..
Key takeaways
- Spread + volume reveals institutional intent
- High volume + narrow spread = absorption
- Effort vs result principle is key
- Stopping volume at lows = institutional buying
Quiz
- High volume with a narrow spread candle suggests: Answer: Potential reversal/absorption. High volume but narrow range means opposing forces are absorbing the pressure — potential reversal.
Educational content, not financial advice.