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Volume Spread Analysis (VSA)

Price Spread

Spread is the difference between the highest price (bar's High) and lowest price (bar's low) in analyzed period. It is used in
Volume Spread Analysis to see the Close Location value, the strength of the pressure (either Bullish or Bearish) and
distribution of the power between the Bulls and the Bears in the analyze period.

Spread is the Difference between High and Low prices over specified period of time. Those who familiar with candlesticks technical analysis know all about it:

What Spread tells us

Spread show us how strong price move is.

Spread shows us how volatile price move is.

Spread shows us whether there was a fight between the Bulls and the Bears,

Candlesticks technical analysis explains us that a white candle (positive price change) tells us that bullish pressure is stronger than the bearish pressure.
Controversially, a black candle reveals that the bearish pressure is stronger than the bullish pressure.
Big candle's body points to big difference between bullish and bearish pressure and small body is a sign of a small difference between bullish and bearish
pressure.
By itself a Spread and candle shows us nothing. Only by comparing it to the previous trend, average price movement (average candle's body), average
spread and price direction, we can explain the present meaning of a candle and a Spread.
Big white candle tells as that the Bullish pressure is stronger than the Bearish pressure - the Bulls are willing to pay higher price to buy The bigger
white body is, the stronger dominance of the Bulls is.

Big Black candle tells as that the Bearish pressure is stronger than the Bullish pressure - the Bears are willing to sell at lower price. The bigger Black
body is, the stronger dominance of the Bears is.

Spread is the difference between high and low and we may have small candle's body within it. Small body means small difference between bullish and
bearish pressure. Small bod within a big spread (candle with big shadows) points to big fight between Bulls and Bears (volatile trading). Again by itself it
tells us nothing - only by comparing it to the previous price movement we may tell whether it is a sign of weakening of the current trend, sign of a
beginning of anew trend or just a confirmation of the current trend.
Volume spread Analysis focuses its attention of strong changes in the Spread - in other words changes in volatility. It looks for a big Spreads and attempts
to translate them into the supply-demand language - explain it from the Bullish/Bearish pressure prospective

Below you may see examples of some possible big Spread variations:

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When we have a big white body it tells us that the Bulls were strong and they did not have any resistance from the Bears. The bullish pressure
suppressed the bearish pressure greatly.

Big black body it tells us that the Bears were strong and they did not run into any resistance from the Bulls. The bearish pressure suppressed the bullish
pressure greatly.

As the Bears pushed price strongly down they run into strong resistance from the Bulls. We had strong bearish pressure, however, as price declined the
Bullish pressure increased and the Bulls managed push the price up and recover most of the loses. At the end the Bears win the battle (black body),
however, it was not an easy fight.

The same as above we may say that we had a strong Bearish pressure, however, as the Bears pushed price strongly down they run into strong
resistance from the Bulls. As price declined the Bullish pressure increased and the Bulls managed push the price up. At the end the Bulls were stronger
(white body), however, they fought for it strongly.

As the Bulls pushed price strongly up they run into strong resistance from the Bears. We had strong bullish pressure, however, as price advanced the
Bearish pressure increased and the Bears managed push price down.. At the end the Bears were stronger (black body), however, it was not an easy win
for the Bears (long upper shadow).

As the Bulls pushed price strongly up they run into strong resistance from the Bears. We had strong bullish pressure, however, as price advanced the
Bearish pressure increased and the Bears managed push the price down.. The Bulls and the Bears were in a fight (long upper shadow) and at the end
the Bulls win with just a small advantage (small white body).

By V. K. for MarketVolume.com

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