Combining VSA with WRB (Wide Range Bar) analysis to be able to spot imbalances between supply and demand can be an extremely powerful tool. This is the highest priority entry rule I have when deciding to enter a trade or not. I am not going to discuss on how to use them for entries, but I will talk about this subject so you will get a clear understanding why WRB are so powerful when spotting Supply/Demand zones and how to look at them from a VSA point of view.
First of all, let me say that we are not just looking at any WRB, we want the WRB's that have very high to ultra high volume. We are looking at the absolute high and the absolute low of this candle. WRB are usually far better respected support/resistance levels than any other form of SR level.
Why are they interesting? Well for many reasons.
However, it is VERY important that we ONLY use this to trade off the imbalance of supply and demand. This is where VSA comes in and guides us right. We do not want to trade any supply/demand zone. There will need to be strength when going long and weakness when going short.
This is a bulletproof short. When a chart looks like this, it hardly goes wrong.
I have drawn a green box, from the low to the high of the WRB candle, the highest volume one. This was an area of HEAVY demand. You see the volume? Look how it pushes price higher.
When we come to highs of this chart, we see that volume turns climactic (the red volume) and starts falling. This was heavy selling/distribution at the top. Price moves back to our previous WRB Demand Zone and where is the volume now? No demand left here?
On the way down to the demand zone, we had some high volume selling going on, and we go two very similar volume WRB's giving us a supply zone. The box is drawn on two bars instead of one because the volume is very high on both and action may look like buying first however it has a bearish result which is why the entire zone is drawn as supply.
Prices moves down to our previous WRB Demand Zone and stops, but with no volume. We draw a fibonacci retracement and see that our Fib Zone (Fibonacci 50%-61.8%) drops right on our Supply Zone. What happenes when price comes up there? We get a nice upthrust on high volume, closing in the middles. This is now a very good sign of weakness by VSA.
I shorted this one after the high volume rejection and it gave me a very nice profit.
There are also situations where we fail. When looking at WRB it is important to follow a few rules
And for gods sake, do not use this article as your ONLY criteria for entry. Look at VSA principles, Accumulation/Distribution, trend direction, trend strength, VSA signals etc. Every single bar matter, every single second on a chart matter.
First of all, let me say that we are not just looking at any WRB, we want the WRB's that have very high to ultra high volume. We are looking at the absolute high and the absolute low of this candle. WRB are usually far better respected support/resistance levels than any other form of SR level.
Why are they interesting? Well for many reasons.
- WRB Combined with Fibonacci confluence in a trending phase can be very powerful.
- WRB Combined with VSA principles gives us even more confidence.
However, it is VERY important that we ONLY use this to trade off the imbalance of supply and demand. This is where VSA comes in and guides us right. We do not want to trade any supply/demand zone. There will need to be strength when going long and weakness when going short.
This is a bulletproof short. When a chart looks like this, it hardly goes wrong.
I have drawn a green box, from the low to the high of the WRB candle, the highest volume one. This was an area of HEAVY demand. You see the volume? Look how it pushes price higher.
When we come to highs of this chart, we see that volume turns climactic (the red volume) and starts falling. This was heavy selling/distribution at the top. Price moves back to our previous WRB Demand Zone and where is the volume now? No demand left here?
On the way down to the demand zone, we had some high volume selling going on, and we go two very similar volume WRB's giving us a supply zone. The box is drawn on two bars instead of one because the volume is very high on both and action may look like buying first however it has a bearish result which is why the entire zone is drawn as supply.
Prices moves down to our previous WRB Demand Zone and stops, but with no volume. We draw a fibonacci retracement and see that our Fib Zone (Fibonacci 50%-61.8%) drops right on our Supply Zone. What happenes when price comes up there? We get a nice upthrust on high volume, closing in the middles. This is now a very good sign of weakness by VSA.
I shorted this one after the high volume rejection and it gave me a very nice profit.
There are also situations where we fail. When looking at WRB it is important to follow a few rules
- - Never short if you had heavy accumulation right before you
- - Never long if you had heavy distribution before you
- - Keep in mind that stops should usually go above/below WRB Supply/Demand Zones and you should be ready to close trade and take profit when hitting the next zone. If volume is low and there is no action when price reaches that level, you can decide if you want to stay in the trade for another swing, aiming for the next WRB.
- - Remember that WRB's can create zones that will be valid for days/weeks in the future.
- - Trade the imbalance of supply/demand, just as the example picture. Do not trade when there is heavy buying in a zone followed by heavy selling in the next. There should be clear intent of direction.
And for gods sake, do not use this article as your ONLY criteria for entry. Look at VSA principles, Accumulation/Distribution, trend direction, trend strength, VSA signals etc. Every single bar matter, every single second on a chart matter.