What is VSA?

VSA (Volume Spread Analysis) is a method for reading institutional behavior through three components: Volume, Spread (the high-low range of a candle), and Close (where price closes relative to the range). Instead of looking at candlestick patterns in isolation, VSA analyzes the interaction between supply and demand through volume, spread, and close location.

VSA descends from Wyckoff principles and was popularized by Tom Williams. The core concept is Effort vs Result: when volume is very high but price fails to move proportionally, a large effort has not produced the expected result, signaling a potential turn.

How to Identify VSA Signals

1. No Demand / No Supply

No Demand is a narrow-spread candle with low volume closing weakly near the low. It shows a lack of buying, so price is likely to continue down. No Supply is the opposite: a narrow-spread candle with low volume that refuses to fall, meaning sellers are exhausted.

2. Upthrust (UT)

An upthrust occurs near resistance. Price pokes above the level but closes back below it, often as a Shooting Star candle with unusually high volume at the end of an uptrend.

After the long upper wick, the close near the low shows sellers stepping in aggressively. High volume reveals distribution by smart money.

3. Spring / Shakeout

A spring is a false break below support. Price dips under support with heavy volume but closes back inside the range, often printing a Hammer.

This action traps late sellers while large players absorb their stock, setting up a bullish move.

4. High-Volume Doji

A Doji has a tiny body and the close very near the open. When a doji appears on unusual volume at an extreme, it signals that the prior active participant has lost control.

How to Trade VSA

Identify the trend and key levels – support/resistance, prior highs/lows.

Wait for a VSA signal at those levels; do not force a trade.

Enter in the direction of the signal – sell after an upthrust at resistance, buy after a spring at support.

Place your stop beyond the signal's extreme (above the upthrust wick, below the spring low).

Confirm the Effort vs Result – volume and spread must align with the anticipated move.

Real Example

Imagine EUR/USD in a downtrend reaches a former resistance. You spot a Shooting Star with volume twice the 20-period average. Price closes below the resistance, confirming an upthrust. You enter short at the close with a stop above the upper wick. High volume tells you trapped buyers fuel the next decline toward the nearest low.

Common Mistakes

Focusing only on volume – without spread and close location, volume is misleading.

Treating every long wick as a VSA signal – context, volume and close location are essential.

Trading the wick immediately – wait for the candle close and volume confirmation.

Ignoring money management – VSA is probabilistic, so always use stop loss and position sizing.

Content is for reference only, not investment advice. Forex trading carries high risk.

Volume Spread Analysis: Reading Volume with Candle Spread