Tradeguider Limited

VSA Keynote 8
Point and Figure Masterclass
Saturday 2nd December 2017
How to Build Wyckoff Point and Figure
Charts using Volume (3)
How to Build Wyckoff Point and Figure
Charts using Volume (2)/Components
of the Accumulation Zone
• Next look for a last area of support. This is the last time
price pulls back towards the lows but on this occasion
volume should be much lower. This is testing which
indicates supply has now reduced and the selling by
the herd is complete.
• Now draw a horizontal line from the top of the
preliminary support bar and the bottom of the selling
climax bar to mark the accumulation phase or zone. Do
not worry if price has dipped lower than the bottom
line on occasions.
• The VSA set up is to buy above the top of this
accumulation zone on a test.
 How to Make a Count
• Firstly remember that not all of the component parts of the accumulation
or distribution phase will always be present.
• To make a count after accumulation requires the selling climax and last
point of support only.
• To make a count after distribution requires the buying climax and last
point of supply only.
• Following accumulation produce the point and figure chart and count the
number of columns from the last point of support back to the selling
climax, multiply this by the box size and reversal size. Add the result to the
low of the selling climax bar to produce the target price.
• Following distribution produce the point and figure chart and count the
number of columns from the last point of supply back to the buying
climax, multiply this by the box size and reversal size. Subtract the result
from the high of the buying climax bar to produce the target price.
 When the Count is Reached
• If price reaches the initial target look carefully
at support and resistance levels, position
within the trend channel and VSA principles
around this area. These will be covered in my
next presentation.
• If everything is bullish/bearish expect price to
continue higher/lower.
• If re-accumulation/re-distribution has taken
place a new count can be made.
What Can Cause the Count to Fail?
• Once the move is underway there are a number of
reasons for the target not to be met.
• Price may reach a strong level of support or resistance.
Without enough effort it may fail to penetrate this
area.
• Serious strength or weakness can de-rail the move. For
example in an uptrend distribution could occur. In a
downtrend accumulation could occur.
• Always be alert to the chart and do not assume the
count will always be reached regardless of VSA
principles and support/resistance levels.
 Component Parts of the Distribution
Zone (2)
• Next look for the last point of supply. This is where price
rallies up towards the highs for the final time. Volume
should be low indicating no demand because the public
buying has been exhausted and the professionals have
already sold.
• Now draw a horizontal line from the high of the buying
climax bar and the low of the preliminary support bar. The
area between the two lines is the distribution phase or
zone. Do not worry if price has risen above the top line on
occasions.
• The VSA setup is to sell on a low volume up bar such as no
demand or an upthrust below the low of this distribution
zone.
 Component Parts of the Distribution
Zone
• Firstly there has to be an advance in price in the
background as the bull market plays out.
• Then look initially for preliminary supply (where sellers
appear but there are too many buyers to stop the up
move at this point).
• Next look for the buying climax where the professional
money sell to the panic buying by the public.
• Then an initial decline takes place but there are enough
buyers still and professionals support prices to enable
further selling.
• Further selling takes place around the highs by the
professionals and often there will be an upthrust.
 How to Build Wyckoff Point and Figure
Charts using Volume/Components of
the Accumulation Zone
• Firstly there has to be a decline in price in the background
as the bear market plays out.
• Then look initially for preliminary support (buyers appear
but too many sellers to stop the down move at this point).
• Next look for the selling climax where the herd panic and
dump their holdings.
• Then an initial relief rally takes place but is stopped by
overhead supply.
• Further buying areas then take place near the lows and
sometimes a shakeout is seen to remove the remaining
weak holders.
 Apple Point and Figure Chart
Chart courtesy of Stockcharts.com
Apple Distribution/Reaccumulation
 Apple Point and Figure
Chart courtesy of Stockcharts.com
Netflix Distribution Phase
 Netflix Point and Figure
Chart Courtesy of Stockcharts.com