Bar by bar analysis of volume, high, low and close has been termed VSA or Volume Spread Analysis. This is the study of the range of the bar, with the consideration to the position of the close relative to size of volume activity and location of the bar within the trend channel of price.
This is from the methods of Richard Wyckoff.
Book References: (See our education page for links)
Charting The Stock Market, The Wyckoff Method - part 2 by Dies Weis **
Investing with Volume Analysis - Buff Dormeier chapter 6
The Undeclared Secrets that drive the Stock Market - Tom Williams (secondedition was called "Master the Markets")
** Dies Weis has a new book coming out called 'Trades about to Happen: A Modern adaptation of the Wyckoff Method' due September 2011. A must read in my view.
The works by Tom Williams is consider by many as the bible on the subject, he is a master of the Wyckoff methods. Tom coined the phase VSA or Volume Spread Analysis (his trade mark).VSA allow you to read stock market price action like it was morse code, if you learn only one thing from readtheticker.com then let be the subject matter of VSA. It is our first weapon of choice before we enter the stock market. Tom Williams first book is excellent, the second not bad either, however his second book is also used to promote software and in our view gets in the way. (We never purchased the software, because quite frankly our website is better) Our advice, buy all the books you can, each offer different insights!
After using VSA for a while, you soon learn that bar by bar action can be of daily, weekly and monthly bars. The multi time frame analysis can take up much of your time, and when you are scanning many charts it gets harder to manage your portfolio. They lower the time frame the more likely you will get false readings, this is true no matter the technical study you apply. Our favorite approach to complete VSA with half monthly bars first (bar one is the 1st to the 15th, bar two is 16th to the end of the month) and then find confirmation with the daily bar.
Our software allows to view half month boxes of average volume with half month boxes of price action on a daily chart. You can also do other permutations with weekly and monthly etc.
Below is an example.
Time Frames available: Daily, Weekly, Half Month, Monthly, Quarterly.
You also get to see support and resistance from the previous periods very easily. All members who subscribe to RTTIndicators can use these tools.
