The ABCs of VSA:

Absorption Volume & Breakouts

By Lauren Snedeker

Todays Objectives
Define and understand Absorption Volume
Confirming the Breakout Bar
Entering the Breakout Trade
Recognize a False Breakout

What is Absorption Volume?

Lets work backwards and review
what we know!
Take out a pen and paper
and number it 1-5
Is the sentence True or False?
If False, correct the answer. Ready??????

Quizeroo
1. Volume = the Supply in the market
2. Up Bars on Ultra Low Volume is the
Climactic Action
3. The Smart Money sells in rising prices
4. A No Demand bar confirms rising prices
5. Support & Resistance should be ignored

Quiz Answers
1. Volume = the Supply in the market
True

2. Up Bars on Ultra Low Volume is the

Climactic Action
False Ultra High Volume

3. The Smart Money sells in rising prices

True

Quiz Answers Contd

4. A No Demand bar confirms rising prices
False No Supply
5. Support & Resistance should be ignored
False observed
How did you do?????

Absorption Volume
Uptrend
Wide Spread
Up Bar
Closes on the high
Ultra High Volume
Breaks through an old top to the left

The Exception Principle

What Absorption Volume means

The Wide Spread Bar = Effort by the SM to
push to price up
The High Close = Interest or Demand for
higher prices by the SM (vs an UpThrust)
The Ultra High Volume = Supply being
absorbed or bought or accumulated by the SM
Must break through an old resistance area
A genuine breakout is tested within 2 bars

Example 1: SPX 5 Minute

Example 2: ES 5 Minute

B Test of Supply within 2 bars

C No Supply/Test
D Test

Example 2 - 700 Bar History

Example 3: ES 15 Minute

Example 3: 700 Bar History

Example 3: Support & Resistance

Entry Points
A No Supply/Test in a Rising Market
(uptrend)
Enter above the high of the No Supply
A Genuine Breakout is tested within 2 bars
A down bar on volume lower than the
previous 2 bars (pink in TG)
Next bar closes up

False Breakout vs True Breakout

False Breakouts
False Breakouts Fail on No Demand
they go up on low volume and come
right down
Upthrusts further confirm weakness
2 Bar Reversals or No Result after Effort
kill the momentum and stop the
buying

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How to Reach Me
Direct Line: 312-373-6294
Email: lauren@tradeguider.com

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