Volume Spread Analysis

A common point of confusion with Volume Spread Analysis (VSA) is that it is taught that ultra high volume on an up bar is a sign of weakness, yet sometimes it can be a sign of strength (which is called absorption volume). As you can see in the bars following the 10:00 bar we did have a test on low volume, but I generally don’t feel comfortable getting long here, as sometimes I find that the market ends up in a period of consolidation where the bars alternate up and down, all on low volume.